Diwali 2024: Bought gold on Dhanteras? Here are the new tax rules on purchase and selling of yellow metal 

Gold investment: After the announcement of the Union Budget 2024, the Centre has implemented revisions to the capital gains taxation regulations across various asset categories, such as gold, mutual funds, equity, real estate, and more. These updated guidelines will go into effect from July 23, 2024, in the ongoing fiscal year.

In relation to gold investments, the following information outlines how different forms of gold investment will be taxed in the current fiscal year:

Gold jewellery

Gold jewellery, comprising items like necklaces, earrings, and rings, is subject to a Goods and Services Tax (GST) of 3%. This tax is calculated based on the prices of the gold jewellery along with any associated making charges. Notably, there is no income tax imposed on the purchase of gold jewellery.
When exchanging old gold jewellery for new pieces, the transaction will be considered as a sale of the old gold. Consequently, the capital gains tax regulations will be relevant to the sale of the old gold jewellery. 

If you exchange your old gold jewelry for new pieces, it will be treated as a sale of the old gold. Therefore, capital gains tax rules will apply to the transaction.

"While most personal effects are generally not subject to capital gains tax, certain items are specifically excluded from this exemption and categorized as capital assets. These include jewellery, archaeological collections, drawings, paintings, sculptures, and other works of art. Gains from the sale of these items are taxable under capital gains tax regulations. Jewellery encompasses a variety of ornaments made from precious metals such as gold, silver, and platinum," said CA (Dr.) Suresh Surana.

Particulars	Holding period	Rate of Tax
Short-Term Capital Asset	Sold / redeemed or maturity before 23rd July 2024 ≤ than 36 months.	At slab rates.
Long-Term Capital Asset	Before 23rd July 2024 > than 36 months On or after 23rd July 2024 > than 24 months.	Before 23 July 2024: - 20% with indexation. On or after 23 July 2024: -12.5% without indexation.

Gold ETF and Gold MFs

Effective April 1, 2025, gold mutual funds and gold ETFs will be subject to the new capital gains tax rules. Until March 31, 2025, the old capital gains tax rules will continue to apply to transactions involving these investments. So this year's purchase will be taxed as per old capital gains tax rules.   

Sr. No.	Nature of Investment	Taxation
1.	Gold Mutual Funds
	-          Held upto 36 months (Purchased before 1 April 2023)	Short Term Capital Gains taxable on Sale at applicable slab rates.   If long Term Capital Gains, taxable at 20% with indexation benefit
	-          Purchased between 1 April 2023 to 31 March 2025	Short Term Capital Gains taxable on Sale at applicable slab rates
	-          Purchased on or after 1 April 2025 and held for upto 24 months	Short Term Capital Gains taxable on Sale at applicable slab rates.   If long Term Capital Gains, taxable at 12.5% without indexation benefit
2	Gold ETF
	-          Held upto 36 months (Purchased before 1 April 2023)	Short Term Capital Gains taxable on Sale at applicable slab rates.   If long Term Capital Gains, taxable at 20% with indexation benefit
	-          Purchased between 1 April 2023 to 31 March 2025	Short Term Capital Gains taxable on Sale at applicable slab rates
	-          Purchased on or after 1 April 2025 and held for upto 12 months	Short Term Capital Gains taxable on Sale at applicable slab rates.   If long Term Capital Gains, taxable at 12.5% without indexation benefit

Sovereign Gold Bonds

The RBI introduced the Sovereign Gold Bond (SGB) scheme in 2015, offering government-backed security to investors. SGBs provide guaranteed returns on investment along with a yearly interest rate of 2.5%. Interest payments are made semi-annually directly to investors' bank accounts. The first batch of SGBs was issued on November 30, 2015, with a maturity date set for November 2023. Subsequently, the 2016-17 series was released on August 1, 2016, with a maturity date in August 2024.  

Under the Sovereign Gold Bond scheme, individual investors are limited to purchasing a maximum of 4 kg of gold bonds per financial year. The minimum investment allowed is 1 gram, and institutional investors such as trusts have the option to purchase bonds up to 20 kg. All applications must be made in increments of at least 1 gram.

This year, the central bank has only released one set of SGBs. If you were unable to purchase SGBs during the initial offering, you now have the opportunity to buy them online through the stock market on the auspicious occasion of Dhanteras 2024. 

"Section 47 of the Income Tax Act provides exemption on the redemption of Sovereign Gold Bonds (SGBs) issued by the Reserve Bank of India (RBI). Any transfer of SGBs by way of redemption is not considered as a "transfer" for tax purposes. This provision implies that individual taxpayers redeeming their SGBs at maturity typically after an 8-year holding period are exempt from capital gains tax on any gains realized, as the redemption does not constitute a taxable event. Furthermore, SGBs allow for premature redemption after a minimum of 5 years on specified interest payment dates, and the capital gains tax exemption under Section 47 extends to these premature redemptions as well. If SGBs are sold in the secondary market prior to maturity, standard capital gains tax rules will apply," Surana said.

Particulars	Holding period	Rate of Tax
Short-Term Capital Asset	Sold / redeemed or maturity before 23rd July 2024 ≤ than 36 months. Sold / redeemed or maturity on or after 23rd July 2024 ≤ than 12 months.	At slab rates.
Long-Term Capital Asset	Before 23rd July 2024  > than 36 months     On or after 23rd July 2024 > than 12 months.	Before 23 July 2024: - 20% with indexation On or after 23 July 2024: -12.5% without indexation.