Precious metals are considered to be collectors' items, just like works of art, rare objects and fine wine. The tax regime applied to gold can vary depending on various parameters. Moreover, taxations take place both in the sale and in the purchase phases. Here is a short guide to help you find your way around this subject.
Gold jewellery: taxes applied to the acts of buying and selling
Buying gold can be done in cash or via banking channels such as credit cards and internet banking. With the introduction of the Goods and Services Tax (GST), customers are required to pay a certain rate on the value of gold jewellery, including when selling it. Fortunately, when you sell your gold to them gold buying agencies like Achat Or Conseil Martigues can help you calculate the exact value of the taxes you have to pay. In any case, keep the invoice for the precious metals you have purchased. However, if it is a gift, have a deed of gift to answer questions about the inherent income tax.
Sale of gold objects: capital gains
If a sale takes place within 36 months of the date of the gold buyout, the proceeds will be taxable as a short-term capital gain. This gain will be added to your total gross income and taxed according to your income tax bracket. In cases where the period between purchase and sale is longer than three years, the proceeds are charged as a long-term capital gain. As such, the taxpayer will have to report the total capital gains earned in the year in which he files his annual tax return.
Taxation of gold: the investment case
Another way to buy gold is to invest in mutual funds, exchange-traded funds and/or gold sovereign bonds. The taxation of returns in the latter case is different, as sovereign bonds earn yearly interest which will be taxed from other taxable sources at the rates corresponding to your income. The maturity amount you will receive after 8 years is linked to gold's market price at that time.