Gold this festive season failed to allure buyers as much as it used to in the seasons gone by. Also lowered prices post the festivities, in which jewellery makers and yellow metal dealers usually charge a premium price, are reported to bring about no cheer to the industry. Nonetheless, the wedding season is likely to go well for the precious metal.
GST on Physical Gold
Physical gold attracts GST @ 3% while in case gold jewellery is purchased 18% GST is levied on the making charges. SGBs or Sovereign gold bonds on the other hand do not attract any GST taxation impact.
On the contrary, newly evolved Sovereign gold bonds or SGBs and gold ETFs do not attract such tax implications.
Capital Gains Tax on Selling Gold
In case you sell gold after booking in profits and the holding period is less than 3 years then short term capital gains tax @ applicable tax slab rate shall be payable. Say after holding gold worth Rs. 1 lakh, you sell it after a period of two years at Rs. 1.5 lakhs making a profit of Rs. 50000. Then this profit of Rs. 50000 shall be added to the total income of the individual and taxed accordingly.
In case the yellow metal is held for over 3 years time and then sold off at a gain then long term capital gains tax implications arise @ 20% with indexation benefit.
Calculation of LTCG tax on gold
LTCG is the net selling price of gold minus indexed cost of gold; wherein indexed gold cost is computed as cost of purchase of gold * (cost inflation index or CII in the year of sales/ CII in the purchase year).
SGBs with interest rate @ 2.5% p.a. is also taxed applicable tax rate of the individual i.e. 5%, 20% or 30% rate.