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Limit on sleeping at home: There is no doubt that gold is considered the most precious metal in India. Almost every household in the country will have gold (even if in small quantities) in the form of jewellery, coins or investment plans. Because in the country, apart from its financial value, gold is also considered a symbol of good luck and wealth. But do you know that there is a limit to keeping gold at home.
According to the Central Board of Direct Taxes (CBDT), gold is purchased by individuals with reasonable income and exempted revenue sources such as agricultural income, legally inherited money (which can be explained) and household savings. But no tax will be levied. If the quantity of gold is within the prescribed limit then the Income Tax officials cannot take gold jewelery from your house during the search operation.
The per capita limit in the country is as follows. Unmarried woman: 250 grams. Unmarried men: 100 grams. Married woman: 500 grams. Married man: 100 grams.
Provision of tax on gold: People have ownership rights over gold in many ways. Let's take a look at the limits and income tax rules applicable to different types of gold.
Tax on physical gold: According to the new CBDT circular, men (unmarried or married) can hold up to 100 grams of gold in the form of jewelery or physical form. Apart from this, women can keep gold ranging from 250 grams to 500 grams. For married women this limit is 500 grams while for unmarried women this limit is 250 grams.
If you sell gold within 3 years of buying it, the government will impose short term capital gains tax on it. Apart from this, if you sell gold after 3 years then you will have to pay long term capital gains tax.
Tax on digital gold: Compared to physical gold, digital gold can prove to be very beneficial in terms of returns. Based on their digital gold purchases, individuals only have to pay GST and other small charges at the time of purchase. According to law, there is no upper limit for purchasing digital gold. You can spend up to Rs 2 lakh in a day on buying digital gold. Additionally, there is no short-term capital gains tax on digital gold held for less than 3 years. However, you will have to pay long-term capital gains tax at the rate of 20%.
Indian citizens are allowed to invest a maximum of 4 kg per year in gold investment schemes like Sovereign Gold Bond (SGB). Additionally, banks and other financial institutions will exclude holdings used as collateral from investment portfolios. The interest rate for SGB is 2.5% per annum, which is added to the taxable income of the buyer. But after eight years the Sovereign Gold Bond becomes tax free. You will not have to pay any GST on this.
If mutual funds and gold ETFs are held for more than 3 years, individuals will have to pay long-term capital gains tax on the fund when selling. Investing in gold can prove to be a wise decision, but it is important to know the right amount of this precious metal to keep in the house. This will help you understand your tax liability and will also save you from any kind of legal action.