Gold Price Rises By Rs 67,370 In 24/10 Grams In Long Term: Tax And Limits Of Holding Gold In India

Gold prices on Saturday witnessed a sharp correction after China announced to temporarily pause on its purchase of gold bullion. Nonetheless, the consolidation in the yellow metal was warranted due to a sharp surge in the first week of June 2024, due to Lok Sabha election poll results and an NDA win. So far in 2024, gold prices of 22K and 24K grams are up by over 12%. In the longest run, the upside is mind-boggling by 1,567%. With bullion making investors rich, did you know there are limitations and tax rules for holding your favourite haven assets?

Currently, 24K of gold in cities like Mumbai, Kolkata, Bangalore, Hyderabad, Kerala, Pune, and Vijayawada is at Rs 71,670 on June 8, 2024. The all-time high in gold prices is at Rs 74,175 which was touched in 2024 as well.

Nearly 25 years ago, in 2000 and 2001, the prices of 24K of 10 grams were at meagre Rs 4,400 and Rs 4,300.

From 2000-to-date, 24K/10 grams of gold prices jumped by Rs 67,270 or 1,528.86% in these cities. Meanwhile, from 2001 to date, the prices are up by a breathtaking Rs 67,370 or 1,566.74%.

How Much Gold Can Indians Hold?

As per the guidelines of the Central Board of Direct Taxes (CBDT), the limits for holding gold jewellery and ornaments without showing any proof are:

- 100 grams of gold allowed for both married and unmarried men.
- 250 grams of gold allowed for women.
- Up to 500 grams of gold allowed to married women.

Tax Rates On Gold:

Under the tax rule, if an Indian sells their gold within 3 years of purchase, then they will be applicable for short-term capital gain tax which would be around 20% plus 4% cess. But if sold after 3 years of purchase, then the citizen will have to pay long-term capital gains.

As per Kotak Life's report, receiving gold in the form of jewellery, bullion, Gold Exchange-Traded Funds (ETFs), or Gold Mutual Funds (MFs) as a gift becomes taxable if the aggregate market value of the received gold exceeds ₹50,000. The taxation is categorized under the 'Income from other sources' and is subject to applicable slab rates based on your income bracket.

However, no tax will be applicable on gold in case 0f --- the total value of gold received as a gift is below Rs 50,000, and if the gift is received from specific relatives such as spouse, siblings, ascendant, descendant, gifts from friends and relatives during marriages, and lastly any inheritance under a will or any law of succession applicable to you.

Furthermore, Kotak's note highlighted that Goods and Service Tax (GST) is applied at 3% on acquiring gold and 5% on the associated making charges. In the case of exchanging gold items such as bars or coins for new jewellery, no additional GST is imposed up to the weight equivalent to the exchanged gold (bars or coins). GST only applies to the value exceeding the weight of the exchanged gold.

Notably, there are no GDT imposed on the sale of gold.

Currently, in India, there are various ways of holding gold such as physical gold, digital gold, mutual funds, sovereign gold bonds, and gold ETFs.

Kotak's report said, that owning gold at home is a common practice, and while there are no strict limits on jewellery, there are guidelines for gold coins and bars. Understanding the income tax rules related to gold ownership is crucial to ensure compliance and transparency in financial matters. It is advisable to stay updated on any regulation changes and consult with financial experts for the most accurate and current information regarding gold ownership and income tax implications.