Page 43 - Bollion World Volume 4 Issue 8 August 2024

Bullion World | Volume 4 | Issue 8 | August 2024

Taxation of Gold Funds

Capital
gains Tax Before Budget Before Budget

Death of LTCG LTCG STCG Tax LTCG LTCG Tax STCG Tax Effective
Investment Period Taxm Rate Rate Period Rate Rate From
Before >36 20% with As per > 12 12.5% Asper July 23,
April applicable without applicable 2024
Gold 1,2023 months indexation slab rate months indexation slab rate
ETFs As per applicable slab rate 12.5% Asper April 1,
After April (no long-term tax rate benefit > 12 without applicable 2025
1,2023 months
available indexation slab rate
Before >36 20% with As per > 24 12.5% Asper July 23,
April months indexation applicable months without applicable 2024
Gold 1,2023 slab rate indexation slab rate
Funds As per applicable slab rate 12.5% Asper April 1,
After April > 24
1,2023 (no long-term tax rate benefit months without applicable 2025
available indexation slab rate

Understanding the Taxation of
Gold Investments

As investors navigate the diverse gold investment Gold ETFs: Gold ETFs are treated differently due to
landscape, understanding the taxation rules is crucial. their status as listed assets. For holdings of one year
Here's a breakdown of how different forms of gold are or less, gains are taxed at the applicable slab rate.
taxed based on their holding periods: For investments held longer than one year, the tax
rate is 12.5%, without indexation benefits.
Physical Gold: For gold held for two years or less,
gains are taxed at the applicable slab rate. For Sovereign Gold Bonds: These bonds offer a unique
investments exceeding two years, the tax is 12.5%, advantage. Gains from Sovereign Gold Bonds are
with no indexation benefits. taxed at the applicable slab rate if sold before one
year, and at 12.5% if sold after two years. Notably, if
Digital Gold (excluding Sovereign Gold Bonds): held to maturity, they are tax-free, provided there is a
Similarly to physical gold, digital gold gains are taxed profit.
at the applicable slab rate if held for two years or less.
For holdings beyond two years, the tax is 12.5%, In summary, while tax treatments vary across
without indexation. different types of gold investments, Sovereign Gold
Gold Funds: Gold mutual funds follow the same Bonds stand out for their potential tax-free benefit at
taxation rules as digital gold and physical gold. Gains maturity. Investors should carefully consider these
are taxed at the applicable slab rate for holdings of factors to optimize their gold investment strategies
two years or less and at 12.5% for those held beyond
two years, with no indexation.