Gold, the value of the precious yellow metal has only risen over time. From physical gold to bonds to digital to SGB, buying gold is considered beneficial, especially during the festive season in India. Our interest in the yellow metal is not waning, but do you know the rules, limits and taxes for different types of gold storage? Even from an investment point of view, apart from mutual funds, SIP, stocks, people also prefer to invest.

So, let’s take a look at the limits, taxes, and rules for storing various types of gold.

Physical gold

Ravi Singh, vice-president and head of research at Share India said according to the latest circular of CBDT its officials not to take gold ornaments and jewelery up to a certain level as a married woman can keep 500 grams of gold in shape. on jewelry and jewellery, 250 gms for unmarried women and 100 gms only for men irrespective of marital status.

“If you sell the physical gold within 3 years of purchase, there will be short term capital gains tax while selling the capital gains tax for 3 years. For in the short term, the profit is added to the total taxable income and taxed at the income tax rate. For the long term, taxed at 20% capital gains plus 4% cess and additional charges if applicable. An additional 3 percent GST has to be paid on the purchase of physical gold,” said Ravi Singh.

In India, most of us invest in gold and physical jewellery, but this is not the best way to invest gold says Amit Gupta, MD, SAG Infotech. Citing the reasons behind this, Gupta said that the high costs, such as payment of fees, GST on purchase, storage and insurance, agent’s commission, etc.

digital gold

Amit Gupta, MD, SAG Infotech said in terms of return on investment, investing in digital gold is almost always better than physical gold.

When you invest in digital gold, you have to pay GST on the purchase price and other small charges, depending on where you invest, he added.

Ravi Singh said that there is no upper limit for buying digital gold. However, the maximum limit to buy gold in one day is 2 lakhs.

“LTCG is applicable on sale of digital gold after 3 years at the rate of 20% plus cess and charges. However, returns on digital gold held for less than 3 years are not directly taxable,” Singh said.

Sovereign Gold Bond (SGB)

The maximum investment limit of SGB is 4 kg per year for each person. According to Amit Khare, AVP- Research Commodities, Ganganagar Commodity, the annual ceiling consists of bonds listed in different sectors during the primary issuance by the government and those bought in the secondary market. The investment ceiling will not include assets as collateral for banks and other financial institutions.

If you buy gold bonds or SGBs, you don’t even have to pay GST, meaning there are no visible charges.

The SGB earns 2.5% interest per year, which is added to the taxable income and charged according to the table. However, all gains through SGB after 8 years are tax-free.

Gold ETFs and stocks

For gold ETFs and mutual funds, LTCG is applicable when held for more than 3 years. The rate is also the same – 20% plus 4% cess. and for investments less than 3 years, the profit is added to the taxable income and taxed as per your IT slab, says Ravi Singh

Different gold investment instruments have different prices, lower and upper limits and time periods. So, make sure you do your due diligence before investing.

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