Taxation of Gold Investment Options
1. Physical Gold (Bars, Coins, Jewelry):
- Physical gold is considered a capital asset for taxation purposes.
- Short-term capital gains (STCG) tax is applicable if the gold is sold within three years of purchase. The gains are taxed at the individual’s applicable income tax slab rate.
- Long-term capital gains (LTCG) tax is applicable if the gold is held for more than three years before selling. LTCG on physical gold is taxed at a flat rate of 20% with indexation benefits.
2. Gold Exchange-Traded Funds (ETFs):
- Gold ETFs are treated similarly to physical gold for tax purposes.
- Short-term capital gains tax is applicable if ETF units are sold within three years of purchase, taxed at the individual’s applicable income tax slab rate.
- Long-term capital gains tax is applicable if ETF units are held for more than three years before selling. LTCG on gold ETFs is taxed at a flat rate of 20% with indexation benefits.
3. Gold Savings Schemes:
- Gold savings schemes offered by banks or jewelers typically involve periodic investments in gold and may offer discounts or benefits upon maturity.
- Taxation on these schemes depends on the structure and terms of the scheme. Returns may be taxed as capital gains or as interest income, depending on the nature of the scheme and holding period.
- Gains from trading gold futures and options are treated as speculative business income for tax purposes.
- Short-term gains from trading gold futures and options are taxed at the individual’s applicable income tax slab rate.
- Long-term gains are not applicable since gold futures and options contracts typically have shorter durations.
5. Gold Mining Stocks:
- Profits from investing in gold mining stocks are treated as capital gains for tax purposes.
- Short-term capital gains tax is applicable if the stocks are sold within one year of purchase, taxed at the individual’s applicable income tax slab rate.
- Long-term capital gains tax is applicable if the stocks are held for more than one year before selling. LTCG on stocks is taxed at a flat rate of 10% without indexation benefits.
6. Gold Mutual Funds:
- Taxation of gold mutual funds is similar to debt mutual funds.
- Short-term capital gains tax is applicable if units are redeemed within three years of purchase, taxed at the individual’s applicable income tax slab rate.
- Long-term capital gains tax is applicable if units are held for more than three years before redemption. LTCG on gold mutual funds is taxed at a flat rate of 20% with indexation benefits.