Indian women hold 11% of the world’s gold, New laws on gold

A 2020-study shows that Indian women hold 11% of the world’s gold reserve!

Gold has been a major source of investment for Indians, both in India and Abroad, due to its socio-cultural significance. Gold has always been regarded as auspicious in Indian culture and the precious metal holds a special sentiment for Indian women, with a 2020-study showing that Indian women hold 11% of the world’s gold reserve!

Sales of gold products, from jewellery to coins and bricks, increases sizably this time of the year due to the onset of the festive season. It is, however, imperative to be well-versed with the government rules and regulations regarding holding gold before buying it.

The Guidelines of the Central Board of Direct Taxes(CBDT) state that gold purchased by traceable and justifiable wealth is not taxable. Gold bought using disclosed income, exempted income and income “out of reasonable household savings or legally inherited” is not subject to taxation.

Government regulations prescribe a limit of 500 grams of gold for married women, 250 grams for unmarried women, and 100 grams for men as permissible to be held under one’s possession. However, so long it is done through explainable income sources, there is no limit for the possession or purchase of gold.

Government regulations prescribe a limit of 500 grams of gold for married women, 250 grams for unmarried women, and 100 grams for men.

As long as the amount of gold is under the aforementioned limit, Government Officials cannot seize it in the form of ornaments and jewellery while conducting search operations.

At the time of purchase, the gold may be subject to Goods and Services tax calculated at 3% of the value of gold plus making charges.

Taxation on the selling of personal gold depends on the time the gold is held for. If the gold is sold within three years of purchase, then the profit from the sale is added to the seller’s income and taxed according to the corresponding tax slab.

However, if the gold is sold after three years of purchase, then the profit on it becomes a long-term capital gain which, when taxed in accordance to Long-term Capital Gains Tax, is taxed at 20% with an indexation benefit plus cess at 4%.

While these taxation rules apply to held gold, profit on the sale of Sovereign Gold Bonds (SGBs) is added to an individual’s income for taxation under three years and similarly taxed as a capital gain over three years at 20% with indexation benefits or 10% without. No tax, however, is levied on SGBs held until maturity.

The latest way of gold accumulation is the purchase of Digital Gold by the means of mobile banking apps like Google Pay, PhonePe, and Paytm. Gold held digitally is subject to the same tax rules as physically held gold and taxes will similarly depend on the duration of holding.

The demand for gold in India was about 446.4 metric tonnes in India.