Taxation on Gold

Are there any tax implications for investing in gold?

No, investing in gold doesn't entail any tax implications.

What is the long-term or short-term capital gains liability, arising at the time of sale?

Ornaments made of silver, gold, platinum or any other precious metal and precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel are treated as capital assets. Hence, a long-term or short-term capital gains liability will arise at the time of sale.

Gold or jewellery when held for the period more than 36 months is treated as long-term capital asset. If they are held for period of less than 36 months, then they are treated as short-term capital assets.

While calculating capital gains, the assessee is entitled to claim as deduction the cost of acquisition from the sale value. In the case of long-term capital gains, the indexed cost of acquisition is allowed as deduction.

In case of a capital loss, for what duration can the same be carried forward by investors?

A capital loss (short-term/long-term) can be carried forward for a maximum period of 8 years from the assessment year in which the loss was first incurred.

A short-term capital loss can be set off against any capital gain (long-term and short-term); however a long-term capital loss can be set off only against a long-term capital gain.

How can investors optimise their capital gains tax liability?

Tax liability arising from long-term capital gains, on the sale of gold or other jewellery can be optimised by investing in a residential house under Section 54 or any other specified assets like capital gains bonds.

Short-term capital gains can be adjusted against short-term capital losses.

What are the Gift Tax implications pertaining to gold?

Gold doesn't fall under the purview of Gift Tax; hence there are no tax implications.

Are investments in gold subject to tax implications under Wealth Tax?

Yes, gold falls under the purview of the Wealth Tax Act. The tax is levied on jewellery, bullion, furniture, utensils or any other article made wholly or partly of gold, silver or platinum.

What are the tax implications of investing in gold bonds issued by SBI?

Under the SBI Gold Deposit Scheme, the following are eligible to make investments, individuals - either singly or two individuals on a 'first holder or survivor' basis, Hindu Undivided Family (HUF), trusts and companies.

The tax benefits of investment in the Gold Deposit Scheme are:

• No Income Tax implications on the interest income
• No Wealth Tax implications on the gold deposited
• No capital gains liability