Here is everything you need to know about taxes that apply to short-term and long-term gains from gold. Read on to know more.
We Indians love gold. Be it in the form of jewellery, gold ETFs (Exchange Traded Funds), coins or sovereign gold bonds, the golden metal constitutes a major chunk of the Indian investor’s portfolio. But, like any other asset class, gold too attracts tax in the long term as well as short term. Here’s your quick guide to know about taxes that apply to short and long-term capital gains from gold.
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Let’s start with the basics.
What are capital gains?
Capital gains are profits that you make after selling or transferring your asset like jewellery, Mutual Funds, stocks etc. In simple terms, it is the difference between the actual cost price of the asset and the price at which it was sold.
There are broadly two types of capital gains:
Short-term capital gain: Profits that you make by selling/transferring any asset held for a period of 36 months or less is known as a short-term capital gain. So, when you sell any gold asset like jewellery, coins, ETFs etc. within 3 years from its date of acquisition, any profits that you earn from the sale will fall under short-term capital gain. Any short-term gains earned from the sale of gold will be taxed as per your Income Tax slab.
For example, if you bought gold coins for Rs. 2 lakhs on 1st April 2015 and sold it for Rs. 3 lakhs on 31st March 2017, you earned a profit of Rs. 1 lakh. Since you held the asset for less than 3 years, it will attract short-term gains and will be taxed based on your current Income Tax slab rates.
Long-term capital gain: On the other hand, if the profit that you earn after selling your gold asset exceeds 36 months or more, the gains arising from the sale are known as long-term capital gains (LTCG) and are taxed at the rate of 20% (plus applicable cess and surcharge).
Check this: How To Calculate Capital Gains And Save Tax