Gold buyers and sellers beware! If you don’t know these 3 tax rules, you may suffer huge losses instead of profits.

Rules For Buying And Selling Gold: In India, gold is not limited to just jewellery, rather it is considered both a safe investment and a tradition. People buy gold in large quantities for weddings, festivals and for future savings. But investors often forget that tax rules apply at every stage of buying, holding and selling gold. If there is no correct knowledge of these rules, a large part of the income can go to tax. In such a situation, it is very important to have a complete understanding of tax before investing in gold.

While buying gold, the first thing that comes to mind is GST. Whether you buy gold jewellery, gold coins or invest in digital gold, 3 percent GST has to be paid on the price of gold. Apart from this, if you buy jewellery, then you have to pay 5 percent GST separately on the making charge on it. That means your total cost increases while buying gold.

What are short-term capital gains?

When you sell gold, income tax (capital gains tax) is levied on it. This tax is not levied on the selling price, but on your profits. The tax rate depends on how long you keep the gold with you. If you sell gold within 3 years (36 months), the profit earned is considered short-term capital gains (STCG) and is added to your annual income and taxable as per your tax slab.

20% tax on long-term capital gains

At the same time, if gold is sold after more than 3 years, then Long-Term Capital Gains (LTCG) tax is levied on it. In this, 20 percent tax has to be paid, but at the same time one also gets the benefit of indexation. Through indexation, the purchase price is increased according to inflation, which reduces taxable profits. It is considered more beneficial for long term investors.

What are the rules on inherited gold?

People also have many questions regarding inherited gold. According to income tax rules, there is no tax on inheriting gold. But if you sell that gold later, then capital gains tax will have to be paid on it. The special thing is that here the holding period will not be counted from your purchase date, but from the purchase date of the person from whom you got the gold.

How many grams of gold are allowed to be kept at home?

The Income Tax Department also sets a limit on the amount of gold that can be kept in the home, provided the source of the gold is legitimate. Generally, without any inquiry, married women can keep up to 500 grams of gold, unmarried women can keep up to 250 grams and men can keep up to 100 grams of gold. In case of possessing more gold than this, it has to be proved whether it was inherited or purchased from the declared income.

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Tax rule on digital gold

digital gold But the tax rules are almost the same as physical gold. While buying it, 3 percent GST is levied and while selling it, STCG or LTCG tax has to be paid depending on the holding period. Overall, gold may be considered a safe investment, but ignoring tax rules can be costly. Therefore, it is important to have complete information about tax before investing in gold, so that one does not have to suffer any loss on profits.