Gold price by Investorocean.com
GST Impact on Gold Rate
Before the implementation of Goods and Service Tax (GST) in India Gold was subjected to 1% service tax along with 1% VAT tax, that was a total of 2% tax. However, when GST was first introduced for Gold the making charges were subjected to 18% charge, which made a huge difference to the overall price of the gold. After, protest and government consideration the rate is distributed and reduced. With the new tax implementations in place, one has to include 3% GST on the value of the gold along with the 5% GST making charges.
The above change still has not changed the scenario of gold market in India, which remains one of the costliest nation to buy gold. Apart from this, a 10% import duty is also levied on gold imported from outside the country, and since a major portion of the jewellery manufacturing is dependent on the imported gold, the prices are soaring high. The vendors find it difficult to acquire raw gold in a decent quantity given the rates of taxes and that has resulted to buying raw gold from unregistered sources. The gold market is affected undoubtedly but the demand has not diminished to its totality. Hence, it may be presumed that the relief on GST rates may not possible in the near future.
Taxes Applicable While Buying/Selling Gold
In terms of physical gold, taxes on selling gold is applicable depending upon the duration that you have held them. For both short term and long terms taxes applicable are different. Long-term capital gains are subjected to 20% tax and an extra 40% cess charge. Any applicable extra charge is also levied at the time of final transaction, also, if you buy gold worth Rs. 2 Lakh or more than an extra 1% TDS is also applicable. While buying physical gold a 3% GST is levied and the price of jewellery include an extra 5% making charge.
Digital gold which is rising in popularity when it comes to investments scheme are also subjected to the same kind of taxes as for physical gold if you hold them for a period of 3 years or more. The tax of 20% along with cess and extra charges, if applicable, is not levied on digital gold held for less than 3 years.
Gold ETFs and Gold Mutual Funds are taxed at the same rate as digital gold.
Sovereign Gold Bonds are treated differently than other gold investments, since there is interest of 2.5% per annum the same is added to the principal value of the gold and hence taxed. The tax levied is dependent on the tax slab that the person falls under.
How Can You Make Gold Investments
Gold is many things all at once; it is versatile and is still unique in every sense. It does not amount to becoming a liability at any point because of its liquid nature and is most certainly is an asset. Investments in gold is not limited to buying gold in physical form these days you can also invest in different schemes as well.
Investing in Physical Gold
Investing in physical gold is buying gold in form of jewellery, coins, biscuits etc. They are the most traditional type of gold investment where you hold on to the physical asset and sell, if and when required, at a higher price.
Investing Gold ETF
Gold (Exchange Traded Fund) ETFs are like stocks and therefore implies that when you a piece of Gold ETF you also own a proportion of the total gold reserve in the market. However, any change in physical gold prices directly affects the difference of rate in Gold ETFs.
Investing in Gold Mutual Funds
Unlike Gold ETFs where you own a digital gold in proportion to the value of your investment, investment in gold mutual funds means that you own a share of the company, which directly mines the physical gold. Hence, any performance lapse in the company itself will affect your investments adversely.
Gold or Gold ETF
There are several parameter on which physical gold and a gold ETF may be differentiated; these differences when considered help you to access which type of gold investments suits your plan.
Physical gold investments have been traditionally very popular but has several parameters that makes it limited as compared with gold ETFs. The purity of gold in physical gold may differ depending upon the grade of the gold but when you invest with gold ETF you your investment is directly with traditional bullions that are 99.5 purity. The price of the physical gold may rise or fall depending upon the domestic market however; ETF pricing is fixed as per the international market.
Physical gold is known for its liquidity, which allows it to be easily traded at any bank, financial institution or jewellers anywhere in the world. Gold ETFs are listed on stock exchanges, which makes it even easier to buy or sell them. Physical gold is taxable based on its holding tenure while for short term investment it is taxable as per the income tax slab and for a long term investment the gains from the physical gold investment is at 20%. While gold ETFs are similarly taxed as the physical gold for short-term gold. Whereas the capital gains from long term is taxed at 20.8%, which includes cess charges.
Hallmarked 916 Karat Gold in Indore
Hallmark in gold is the certification for its authencity, for its purity and which has been verified as being of high grade. The Indian gold standard certifying institution is known as BIS (Bureau of Indian Standards) which is responsible in assigning the hallmark for gold standards. Hallmarked gold is the ultimate guarantee, which assures the buyer of the quality of the gold, its weight and the percentage of gold in the composition.
Being hallmarked assures that the quality of the gold is as stated by the vendor and that buyers are not misled when purchasing or reselling things. The BIS assesses and declares if a certain gold piece meets international purity criteria. The gold is examined in one of the 330 BIS assaying centres located around the country.
A hallmarked 916 Karat gold is the verified purity of the gold jewel which has 91.6% pure gold in it along with the alloy. They are also known as 22-carat gold as the second purest form of gold available, but as opposed to the 24-carat gold a 916 hallmark gold is preferred for jewellery because of its physical properties which is much more harder and stronger than the 24-carat gold.
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