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Tax applied for gold bees or gold ETF

Question BankCategory: Income TaxTax applied for gold bees or gold ETF
Kollipara sundaraiah asked 1 year ago

It person buying of gold bees or any gold ETF from exchange after selling 5 days . assessess buying and selling transaction 10 times.
Question:
Tax applied procedure on gold bees or gold ETF in it act.

1 Answers
Rahul answered 1 year ago

Taxation on buying & selling GOLD BEES or OTHER GOLD ETF.
GOLD, jewellery of gold or other precious metal or units of GOLD EFT are not excluded from the definition of capital assets as given u/s 2(14) of income tax Act. Hence these properties are treated as capital assets.
Any gain arising from buying & selling of capital assets is taxable under the head capital gain.

Hence any gain arising from the sale of gold, jewellery, or units of gold ETF is taxed as capital gain.

IF these assets are sold within 36 months from the date of purchase then gain is treated as SHORT TERM CAPITAL GAIN and taxed as per SLAB RATE as applicable. 

IF these assets are sold after 36 months from the date of purchase then gain is treated as LONG TERM CAPITAL GAIN and taxed @20% with indexation as per CII table given below:- 

As per Notification no. 62/2022, dated 14-06-2022 following table should be used for the Cost Inflation Index :-

Sl. No.
Financial Year
Cost Inflation Index

(1)
(2)
(3)

1
2001-02
100

2
2002-03
105

3
2003-04
109

4
2004-05
113

5
2005-06
117

6
2006-07
122

7
2007-08
129

8
2008-09
137

9
2009-10
148

10
2010-11
167

11
2011-12
184

12
2012-13
200

13
2013-14
220

14
2014-15
240

15
2015-16
254

16
2016-17
264

17
2017-18
272

18
2018-19
280

19
2019-20
289

20
2020-21
301

21
2021-22
317

22
2022-23
331

For example, IF you purchased units of gold etf in FY 2019-20 for Rs. 100000/- and sold in FY 2022-23 for Rs. 150000/- . Then 
indexed cost of purchase will be = 100000 * CII of 2022-23 / CII for 2019-20
= 100000 X 331 / 289= 114533/-
Long term capital gain = sale value – indexed cost
= 150000-114533 = 35467/-
Hence LTCG of 35467 is taxable @ 20%.
Now coming to your case, where buying & selling transaction is done 10 time. 
If transactions are intraday, and it is your business to buy & sell for differential gain. Then you may decide to be taxed in the head PGBP as business income. In this case, you can claim a deduction of related expenses from the gain.
But if the transaction is not intraday or if it is not your business but you invested money in GOLD ETF and then decide to sell your invesment before 36 months. Then the gain is taxable as STCG (short-term capital gain. ) and the tax rate will be your slab rate. 

Please note that in case of loss in the transaction, you cannot set-off capital loss from another head of income but you can carry forward capital losses upto 8 assessment year to adjust against capital gains in coming years. But

  1. Long-term capital losses can be adjusted only against long-term capital gains.
  2. Short-term capital losses can be set off against long-term capital gains as well as short-term capital gains
  3. Cannot be carried forward if the return is not filed within the original due date

 

 In budget 2023 for Financial year 2023-24, The conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains. This would promote investments in the electronic equivalent of gold.

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