Did you know that there is an applicable sales tax on gold and silver by the state governments? It’s true. While gold and silver are already exempt from federal taxes, some states still have sales taxes for these precious metals. And this can be frustrating for anyone out shopping for items like jewelry or bars.
Gold is our national treasure. It has been with us from the very beginning of time and its use dates back to ancient times. Gold is considered auspicious and is therefore symbolized in religious faiths as well as tradition. Our forefathers have left behind many coins, jewellery and other gems that have been used for centuries alongside gold items like utensils, idols and coins.
There are numerous benefits of investing in physical gold and silver. However, these metals are considered as securities and must be qualified for the purpose of investment. One would also have to pay taxes on these deduction while selling Gold depending on his or her country of residence. Another aspect to brace oneself against is theft and storage problems, which can lead to loss of investment capital due to internal issues.
What is the sales tax on gold?
Gold prices are calculated per gram using the Gold Price Calculator and made up of gold price, GST and the making charge. As of July 2022, the GST rate on gold purchases is three per cent on the gold price and five per cent on the making charge.
If you sell gold jewellery, you will have to pay taxes as per the commencement date of holding. Apart from these, if you are looking to sell your gold jewellery by selling it within three years, then you will incur STCG tax and if you have held up to three years, then you will need to pay the LTCG tax of 20.8% (including cess). However, if you want to get indexation benefits then the ceilings are provided under Section 80C of Income Tax Act 1961.
Can you buy gold without sales tax?
Gold is bought and sold in the dematerialised form, be it for investment, investing for wealth creation or to meet your need for gold. Four popular instruments can help you invest in dematerialised gold. Let’s look at each of them in detail:
- Sovereign Gold Bonds (SGBs) :
SGBs are a great opportunity for those who want to invest in the idle cash lying around. SGBs present an opportunity to earn interest in a simple, hassle-free and secure way. There is no need to keep track of your investments or remember about them later on. With SGBs you can save tax by holding on to your money until maturity and then convert it into cash.
- Gold Exchange Traded Funds (ETFs) :
If you are looking to invest in gold ETFs, then the Fi money app is just what you need! These investments are also free from the hassles of holding physical gold and can be easily redeemed at any time.
- Other gold mutual funds :
Gold ETFs are the most popular investment option for individuals who seek to make money from gold. Buying gold ETFs is very simple and convenient. Even beginning investors can purchase these funds with a minimum amount of investment. However, before you invest in any fund or choose an investment portfolio, it is important to understand what you should be looking out for in order to make an informed decision.