Gold is an old means of investment. Indians are very fond of gold and they keep buying gold for various occasions. Since the value of gold is high and Indians will buy gold either as an investment or as an ornament, the taxing system wanted a piece of it as well.
The applicable taxes on gold are as follows:
Gold and valuable jewellery comes under the definition of wealth. If wealth exceeds more than Rs.30 lakh, then 1% wealth tax is to be paid. The valuation of gold is carried out as per the rates of 31st March. If the value of the gold is more than Rs.5 lakh, then the valuation report of the gold value has to be obtained from a registered valuer. If you haven’t paid the wealth tax and if there is a raid from the Income Tax Department, then the IT personnel cannot seize 500 grams of gold from married woman and 250 grams from unmarried woman. IT personnel can also not seize the gold that has been disclosed in the wealth tax return. Therefore, it is important that the wealth taxpayer must regularly file the wealth tax return.
1% VAT is charged on the purchase and sale of gold that are carried out in cash in Maharashtra State. Cash transactions are not good for the Economy of India and hence the government puts restrictions on purchase of gold.
Gold ETF (Exchange Traded Funds) can be carried out in the stock markets. This reduces the risk of handling gold. If gold ETF is sold after 12 months from its date of purchase, then long term capital gain is charged at 15% on the profits. If it is sold within 12 months, short term capital gain is levied at 10% on the profits.
Tax free Gold:
Gold is tax free when a woman receives it as a gift at her marriage as per the Hindu Law. But you must keep a record of the gift that you have received a gift at your wedding to avoid confusion with the Income Tax Department.
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