Tax implications of shopping for gold bonds and holding till maturity

NEW DELHI: Reserve Bank of India rules mandate that sovereign gold bonds should be listed on exchanges, therefore one can purchase and promote gold bonds on exchanges utilizing a demat account. Capital beneficial properties on gold bonds held until maturity are tax free. The gold bonds have a tenure of eight years. In case gold bonds are purchased on exchanges and are held until maturity, the beneficial properties are tax free even when the holding interval is lower than eight years. Also Read | Australia’s prime time battle towards large tech “As per the provisions of the Income-tax Act,1961, any switch of sovereign gold bond (issued by the Reserve Bank of India) by the use of redemption on maturity by a person taxpayer will not be thought to be a switch for capital beneficial properties goal. Thus, there ought to be no capital beneficial properties tax implications within the arms of a person who buys such sovereign gold bond (SGB) from a secondary market and redeems it on maturity,” said Parizad Sirwalla, partner and head, global mobility services, tax, KPMG India. “As per section 47, transfer of sovereign gold bond by way of redemption is not treated as transfer for the purpose of computing capital gains. Thus, gains arising on redemption of gold bonds are exempt from tax. The exemption shall be available even if the bonds are obtained from the secondary market,” mentioned Naveen Wadhwa, deputy normal supervisor, Taxmann, a tax analysis agency. So, suppose you purchased a gold bond in 2019 from the secondary market which is maturing in 2022, the beneficial properties from the identical might be tax exempt in case you maintain until maturity. The RBI points gold bonds on behalf of the federal government every now and then. Many folks have invested in sovereign gold bonds in major points. As per knowledge from RBI, prospects have purchased 2.91 crore models of gold bonds within the 11 problems with FY20-21. The purpose was the surge in yellow steel costs which delivered a return of near 25% in 2020. Subscribe to Mint Newsletters * Enter a legitimate electronic mail * Thank you for subscribing to our publication.