The complete guide about Gold Tax in India is as follows. Read the complete article to know all about tax on gold purchase, TCS applicability on Gold Jewellery, Tax free gold, etc.
Gold Tax in India
Gold is the precious metal which is used for many purposes in India. Mainly in India, people keep buying gold for various occasions and also for the purpose of investment. So, the taxing system in India has taken advantage of this since the value of gold is high and Indians will buy gold either as an ornament or an investment. The latest updates on Gold Tax in India is as follows.
- The budget has announced an excise duty of 1% on gold and diamond jewellery, which comes as a blow to the jewellery sector which was hoping for a cut in import duty on gold from 10% to 2%.
- The govt has increased the customs duty on imported imitation jewellery from 10% to 15%.
- Finance Minister has proposed to levy 1% excise duty (ED) on Gold jewellery without input credit or 12.5% excise duty with input credit.
- VAT of 1% is charged on the sale and purchase of gold that are carried out in cash in Maharashtra. The Govt puts restrictions on purchase of gold because the cash transactions are not good for the Economy of India.
- In the Union Budget 2016, Finance Minister Arun Jaitley announced a levy of 1% TCS (Tax Collected at Source) on cash transactions for buying gold worth over Rs. 2 Lakh.
TCS applicability on Gold Jewellery
The Indian government had announced the levy of 1% TCS (Tax Collected at Source) on cash transactions over Rs. 2,00,000 to buy gold jewellery. This is one of the measures to check and bring down black money in the system. On such issue, jewellers across India shut their shops and took to the streets to strike which lasted for approximately 45 days.
This TCS of 1% will apply from 1st June 2016 only on cash purchases of jewels and gold in excess of the Rs. 5 lakh threshold.
The industry has welcomed the decision to roll back at least the TCS on gold purchases over Rs. 2,00,000. Instead the TCS (Tax Collected at Source) will be applicable for cash transactions over Rs. 5,00,000, as it was earlier.
Because of this governments decision to roll back at least the TCS on gold purchases over Rs. 2,00,000, many of the people are commenting that the decision was a huge relief for the people who looking to buy wedding jewellery as Rs. 2,00,000 is a very small amount.
Gold demand in India has been faltering (lose strength) for some time now. Initially, it was the high prices of gold that kept buyers at bay and later it was the imposition of the 1% excise duty (ED) on non-silver jewellery.
Tax free Gold
In some cases Gold is tax free in India. If a woman receives Gold as a gift at her marriage then there will be no tax on that Gold as per the Hindu Law. But you must keep a record of it that you have received a gift of Gold at your wedding to avoid confusion that may arise with the Income Tax Department.