gold
FAQs
Gold
Gold jewelry cannot be considered as an investment. Though the gold can be liquidated at future gold price, the overheads like making charges, wastage etc is very high @ 20-25%, thus making it an unviable investment.
One can buy gold up to Rs 2 lakhs in cash. As per Income Tax laws, recipient can not accept Rs 2 lakhs or more in cash for a single transaction. One needs to provide PAN number, Aadhar etc. for purchase of gold above Rs 2 lakhs.
Hallmarking is a certification of purity accredited by the Bureau of Indian Standards (BIS).
It is a guarantee of the purity of gold purchased.
While buying gold, check for:
- BIS mark (denoted by a triangle)
- the caratage (22K915) that shows the purity of gold
- The mark of the jeweller
- Mark of the Assaying and Hallmarking Centre (AHC)
For those who have old un-hallmarked jewellery
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- Get the jewellery hallmarked by a BIS registered jeweller
- Get the jewellery tested by any BIS recognised Assaying & Hallmarking Centre
- Customer can directly get the jewellery tested at any recognised Assaying & Hallmarking Centre
- A test report will be provided that will assure the customer of the purity of jewellery
- Gold jewellery hallmarked with old symbols need not be re-hallmarked with the 6 digit alphanumeric code.
Pros of 14 carat gold:
- Affordable
- Can be bought online on platforms like Amazon, Flipkart, etc.
- Lifetime exchange policy wherein gold will be valued at the prevailing prices for that purity by the company
Cons of 14 carat gold:
- Some companies levy handling charge (around 2%) on 14 carat gold jewellery
- Can not take loan against gold
Gold if sold after 3 years is applicable to long term capital gains tax. The sale price needs to be reduced by indexed cost of acquisition (or purchase price) to arrive at capital gain. This capital gain would be taxed at 20%.
However, if the amount is reinvested in purchasing a house, the amount re-invested can be claimed as exempt from tax under Section 54F.
Gold if sold before 3 years is applicable to short term capital gains tax. The short term capital gains are added to income and taxed as per your applicable tax slab rate.
There is no tax applicable when one inherits gold or receives gold as a gift from blood relatives.
Upon selling the inherited gold and making profits, one needs to pay capital gains tax as below:
If sold within 3 years – Short term capital gains applicable on the gains – added to income and taxed as per applicable tax slab.
If sold after 3 years – Long term capital gains tax applicable at 20% (with indexation benefits)
Gold jewellery schemes offered by jewellers allow individuals to make regular contributions towards purchasing gold in the future.
Demerits of Gold jewellery schemes:
- You can buy mainly Gold jewellery and not gem stones / special jewellery / coins / bars
- Jewellery can be purchased only from the same jeweller
- The invested amount cannot be redeemed for cash
- The lower making charges are lower only for select designs
- Not a regulated investment market, hence risk of fraud by the Jeweller.
The bond’s maturity period is for 8 years. However, you can choose to exit the bond from 5thyear onwards (only on interest payout dates).
The bond’s maturity period is for 8 years. However, you can choose to exit the bond from 5thyear onwards (only on interest payout dates).
Yes, a customer can apply online through the website of the listed scheduled commercial banks. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.
The current interest rate for SGB is 2.50% annually. Returns are linked to the current market price of gold.
Eligible investors include individuals, HUFs, trusts, universities, charitable institutions.
Yes, joint holding is allowed.
Yes. The application on behalf of the minor has to be made by his / her guardian.
You can view it in your demat account. In case of online applications, the certificate of holding is emailed to the customer by the depository.
The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing banks/ SHCIL offices/ Post Offices/ Designated stock exchanges/ agents or obtained directly from RBI on email, if email address is provided in the application form.
The Bonds are issued in denominations of one gram of gold and in multiples thereof.
Minimum investment in the bond is two grams
Maxiumum buying limit is 500 grams per person in a fiscal year (Apr to March).
The bonds are tradable on stock exchanges from the date to be notified by RBI. The bonds can also be sold and transferred as per provisions of Government Securities Act.
Interest on SGB is taxable as per the income tax slab of the investor. Long term capital gains on SGB is 20% with indexation benefit. Short term capital gain will be applicable if the bonds are sold within 3 years from the purchase date and will be taxed as per the applicable tax slab.
TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.
Indexation benefit is available on long term capital gains that may accrue on sale of the SGB before maturity.
Advantages of Gold ETF:
Digital: can be bought online and kept in a Demat form
Scalable: can be bought in smaller units
Transparent: tracks the price of the gold
Liquid: can be liquidated at any point of time on exchange
No. It is taxed as capital gains.
Gold loan is a secured loan taken from a lender by pledging gold jewellery or coins as collateral.
Gold loan is preferred over Personal loan as interest rates on gold loans are lower than personal loan.
One can take a loan of up to 90% of the value of pledged gold.
Only the gold component of ornament is considered for calculating the value of gold. Other metals, stones and gems are not included.
The various ways by which one can repay gold loan are:
- Paying only the interest monthly. Prinicipal amount to be paid fully at maturity
- Regular monthly EMI’s towards principal and interest
- Bank charges monthly interest but principal along with entire interest amount to be paid at the end of the loan tenure
- Partial or full payments of both interest and principal components can be made anytime during the loan tenure. Not required to service the EMI schedule. Interest is charged only on outstanding loan amount
- Overdraft facility against the pledged gold. Monthly interest to be served for borrowing the amount from the overdraft account
On failure to repay gold loan, bank will levy late fee as penalty.
- Penalty fees are approximately around 2% per annum over and above the applicable rate of interest.
If unable to repay the loan even after reminders, pledged gold may be seized and auctioned by the bank.
Generally, foreclosure charges of upto 2% + GST is charged if loan account closed within 3 – 11 months
No foreclosure charges, if closed after that.
- loss of income;
- loss of business profits or contracts;
- business interruption;
- loss of the use of money or anticipated savings
- loss of information
- loss of opportunity, goodwill or reputation;
- loss of, damage to or corruption of data; or any indirect or consequential loss or damage of any kind howsoever arising and whether caused
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