How much gold is too much gold to keep at home? Know about the limits and income tax rules!

Almost everybody in India believes in gold investment and considers it an auspicious metal. Read on to know about the income tax rules and limits of purchasing gold here.
Rules and limits on Gold purchase
Rules and limits on Gold purchase

Gold as a metal is the one that is desired by both humans and the divine.

 

Especially in countries like India where women take pride in their jewels, gold plays an essential role. 

 

The value of gold has only seen leaps with time.

 

It is not only purchased and stored in the form of physical gold, but is also kept in bonds, digital forms, and in the form of SGBs.

 

Purchasing the yellow-colored metal is not only beneficial for economic savings but is also considered extremely auspicious in India. 

 

While the preference and likingness toward gold have been robust since ancient times in India. 



However, the government sets some laws, limits, and taxes for storing various forms of gold. 



Read on to know the various rules, limits, and taxes for storing various forms of gold.

 

We'll begin with Physical Gold first.



Physical gold

As per experts, most people in India invest in physical gold, however, it is not the best way to invest in gold.



The reason why it is not a good idea lies in the high cost involved, like making charges, storage and insurance cost, tax (GST) on purchases, agent commissions, and more.



Married women in India can hold up to 500 gms of physical gold in the form of ornaments and jewelry. The limit to store physical gold at home for unmarried women is up to 250 gms.



For men, irrespective of their marital status, the limit is up to 100 gms.




Ravi Singh, Vice President and Head of Research at Share India, explained that "if you sell the physical gold within 3 years of buying, a short-term capital gains tax will be levied if sell after 3 years long term capital gains tax will be levied.



For the short term, the capital gains will be added to total taxable income and taxed at the income tax slab rate.



For the long term, your capital gains will be taxed at 20% plus a 4% cess and additional surcharge if applicable.

 

Additional a GST of 3 percent will have to be paid on the purchase of physical gold."


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Sovereign Gold Bond (SGB)

 

One can invest in SGBs up to the maximum limit of 4kgs annually. 




Gold ETFs and mutual funds



In the case of gold ETFs and mutual funds, the LTCG is applicable in case it is held for around 3 years. 

 

The rate too doesn’t change. It remains at -20% plus 4% cess. For investments of less than 3 years, the gains are added to the taxable income. It is then taxed according to your IT slab.



Digital gold

 

Experts say that where terms of returns on investment are concerned, digital gold investment is perhaps a better option than physical gold.



In cases of digital gold, one only has to pay GST on the purchase price, along with some other minor charges.

 

The purchase of digital gold does not come with an upper limit. However, there is a maximum limit to purchasing gold in a single day. The limit is ₹2 lakh.



The Takeaway 

 

Gold is a precious metal and investing in gold has never failed to satisfy the masses.  Different gold investment types differ by costs, tenure periods, and minimum and maximum limits. 

Thus, it becomes crucial to analyze all the facts and do your diligence before taking the step to invest in gold.

 

 

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