When it comes to gold, we know how important a role it has played in our culture and traditions for centuries. At the same time, due to the continuous increase in its prices for the last few years, people also like to invest in it. Because investing in gold gives reliable returns over time. Therefore, it is an attractive investment option for investors who want to diversify their portfolios. This is the reason why gold imports in the country in the financial year 2021-22 were $ 46.14 billion, which is 33.34% more than last year.

But do you know how much tax is levied on buying or selling gold? In some cases, you also have to pay income tax on the purchase of gold. Let us know in detail about the tax levied on it (Tax From Gold Earning).

Taxes on Physical Gold Purchase
Purchasing or selling physical gold includes jewelry, gold biscuits, coins, etc. According to the Indian Income Tax Act, selling physical gold attracts a tax of 20%, along with a cess of 4% on long-term capital gains (LTCG). Thus, the overall taxable rate on gold is 20.8%. However, this rate does not apply to short-term capital gains.

As far as physical gold is concerned, there are several other things that you need to keep in mind:

1) Custom Duty on Gold in India 2024
The government levies customs duty or import duty on imported gold. As a large part of India's gold demand is met through imports, our domestic gold mines are unable to meet this demand. Custom duty is levied on the majority of imported gold. Recently, the Government of India has reduced the custom duty on gold bars from 12.5% ​​to 10%. Combined with GST, the final tax on physical gold becomes 10% plus 3% GST.

2) Agriculture Infrastructure Development Cess (AIDC)
The Government of India collects AIDC for the development of the nation. 5% AIDC is levied on the import of gold. The total tax on gold comes to 18% when the import duty fee, GST and AIDC are combined.

3) Goods and Services Tax (GST Rate on Gold 2024)
GST (Goods and Service Tax) is levied on the sale of gold by jewelers or traders. 3% GST is levied on the purchase of physical gold. For example, on importing gold worth Rs 1 lakh, 3% GST will be levied on Rs 1,15,000 (after adding import duty and cess). That is Rs 3,450, due to which the price of gold for the customer will increase to Rs 1,18,450.

4) Making charge and GST on it
Although the making charge is not included as tax, this charge is levied on molding gold into coins or jewelry, on which additional GST is levied.

5) Tax deduction at source (TDS)
1% TDS is levied on purchasing physical gold worth more than Rs 1 lakh. This amount can be adjusted against annual tax liability.

Tax on selling physical gold

1) Short-term capital gains tax (STCG)
STCG (Short-term Capital Gains Tax) is applicable when gold is sold within three years of purchase. This gain is added to the income of the individual and taxed based on his income tax slab, for example, if one falls under the 30% slab, then the gain amount (selling price - purchase price) will be taxed at 30%.

2) Long Term Capital Gain Tax (LTCG)
The gain on gold sold after three years of purchase is taxed at 20%, with indexation benefit used to adjust the purchase price for inflation.

3) GST on Jewellery Exchange
The exchange of gold jewelry involves taxation-related nuances, so a lot of caution needs to be taken during the transaction. There is no GST on exchanging the same amount of gold. For example, there is no GST on exchanging 100 grams of jewelry for another 100 grams of jewelry, the charge is only applicable for the difference in making charges and the tax applicable to it.

Tax on digital gold
People's interest in digital gold has increased a lot in the last few years. However many people still do not know much about the tax on digital gold. Digital gold is taxed just like physical gold. The only difference is in the method of purchase - anyone can buy digital gold online.

Capital gain tax on digital gold
If the digital gold kept in the digital vault is sold within 3 years, the profit made from it is considered a short-term capital gain tax. This capital gain is added to your total income and tax is levied on this gain according to your tax slab. On the other hand, selling digital gold after 3 years is considered as long-term capital gain (LTCG). On which a 20% tax is levied after the indexation benefit.

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