If you invest in gold, then what is the best option in Sovereign Gold Bond, Digital Gold and Gold ETF and where is the lowest tax?

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Sovereign Gold Bond is considered the most suitable for investment. It gives an annual return of 2.5%. Apart from this, capital gains on maturity of 8 years are completely tax free.

May 28, 2022 | 12:44 PM

, Edited By: Shashank Shekhar

May 28, 2022 | 12:44 PM




Inflation is increasing. On the other hand, the strength of the dollar is declining and bond yields are also weakening. In such a situation, once again the interest in gold investors has increased. If you are also among those investing in gold, then you can invest in it in many ways. Apart from physical gold, investing in gold ETFs and gold based mutual funds, digital gold, gold bonds called sovereign gold bonds has become very easy. However, the regulations and tax rules for investing in different instruments are different. Let us know where to invest in terms of tax would be the smartest decision.

Inflation is increasing. On the other hand, the strength of the dollar is declining and bond yields are also weakening. In such a situation, once again the interest in gold investors has increased. If you are also among those investing in gold, then you can invest in it in many ways. Apart from physical gold, investing in gold ETFs and gold based mutual funds, digital gold, gold bonds called sovereign gold bonds has become very easy. However, the regulations and tax rules for investing in different instruments are different. Let us know where to invest in terms of tax would be the smartest decision.

Sovereign Gold Bonds are considered the best for investment. Investing in this gives a return of 2.5 percent on an annual basis. This gets added to your total income, which is taxed according to the tax bracket. Its maturity is of 8 years. An investor can buy gold bonds up to Rs 4 lakh. There is no tax on capital gains on selling it after 8 years. Long term capital gains tax of 20 per cent is levied if sold between 5-8 years. However, indexation benefits are available. Short term capital gains tax is levied if sold before 3 years. Sovereign gold bonds also do not attract TDS of 1% which is applicable on physical gold. Apart from this, no commission or GST is also levied. A separate discount of Rs 50 per gram is available on buying online. It is necessary to invest at least 1 gram in this.

Sovereign Gold Bonds are considered the best for investment. Investing in this gives a return of 2.5 percent on an annual basis. This gets added to your total income, which is taxed according to the tax bracket. Its maturity is of 8 years. An investor can buy gold bonds up to Rs 4 lakh. There is no tax on capital gains on selling it after 8 years. Long term capital gains tax of 20 per cent is levied if sold between 5-8 years. However, the benefit of indexation is available. Short term capital gains tax is levied if sold before 3 years. Sovereign gold bonds also do not attract TDS of 1% which is applicable on physical gold. Apart from this, no commission or GST is also levied. A separate discount of Rs 50 per gram is available on buying online. It is necessary to invest at least 1 gram in this.

In today's time there is a lot of craze for digital gold. 1 rupee can also be invested in this. However, buying digital gold attracts a GST of 3 per cent. Apart from this, the commission of the seller of digital gold will be separate. Overall, it is a ratio of 5-7 percent. The platforms selling digital gold are not yet regulated. In such a situation, it will be very difficult if there is any kind of fraud.

In today’s time there is a lot of craze for digital gold. 1 rupee can also be invested in this. However, buying digital gold attracts a GST of 3 per cent. Apart from this, the commission of the seller of digital gold will be separate. Overall, it is a ratio of 5-7 percent. The platforms selling digital gold are not yet regulated. In such a situation, it will be very difficult if there is any kind of fraud.

Talking about Gold Exchange Traded Fund ie Gold ETF, it is a passive way of investing in gold. One gold ETF unit means 1 gram. Gold ETF units can be traded like a stock on both BSE, NSE. It is in a way like buying gold in online mode. However, on redeeming it, you get cash, not gold, which is according to the value of gold at that time. There is no wealth tax on Gold ETFs. Apart from this, there is no security transaction tax, value added tax (VAT) and sales tax.

Talking about Gold Exchange Traded Fund ie Gold ETF, it is a passive way of investing in gold. One gold ETF unit means 1 gram. Gold ETF units can be traded like a stock on both BSE, NSE. It is in a way like buying gold in online mode. However, on redeeming it, you get cash, not gold, which is according to the value of gold at that time. There is no wealth tax on Gold ETFs. Apart from this, there is no security transaction tax, value added tax (VAT) and sales tax.

Talking about physical gold, capital gains tax is levied on it. Short term capital gains tax is levied if sold within 36 months of purchase. It is included in your total income and is taxed according to the tax bracket you fall in. If sold after 36 months, it is called long term capital gains tax and is taxed at 20 per cent. The benefit of indexation is definitely available but surcharge and cess are also applicable on this transaction.

Talking about physical gold, capital gains tax is levied on it. Short term capital gains tax is levied if sold within 36 months of purchase. It is included in your total income and is taxed according to the tax bracket you fall in. If sold after 36 months, it is called long term capital gains tax and is taxed at 20 per cent. The benefit of indexation is definitely available but surcharge and cess are also applicable on this transaction.






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