I have investments in gold ETFs and even SGBs and plan to redeem them in the current financial year. The tax rates for most assets were changed in budget 2024 and some places mention that gold will now attract lower taxes. What type of gold investment will have lower tax rates and how does the budget changes affect my gold investments?
Gold has always been a popular investment, but the recent spike in gold prices over the last year has got many investors thinking about cashing in on their profits.
See earlier, one could only invest in gold physically, but today, there are various other ways as well. There’s digital gold, gold mutual funds, and even gold ETFs and Sovereign Gold Bonds (SGBs) as you mentioned.
Now, whenever you sell gold, your profits will be taxable and the tax rate will depend on the type of investment and holding period. Moreover, as the tax rules were amended in this year’s union budget, your tax rate will also depend on when you sell these investments.
Here’s a table that should simplify.
*New rates will come into effect from April 1, 2025
Hence with the new rates effective 23rd July 2024, long term gains from all forms of gold investments will be taxed at 12.5%, and short term gains will be taxable at your applicable slab rate.
For listed securities, the holding period will be 12 months while for others it’ll be 24 months.
However, for gold ETFs and mutual funds purchased after 1st April 2023, the new rates will apply from 1st April 2025, i.e. from the next financial year onwards. Hence, any gains that you realise in the current financial year will be taxable as per the old rates only.
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