Smart Ways to Invest in Gold and Minimize Capital Gains Taxes
Most of them wrongly invest in gold, While selling the gold paying 20% tax on capital gain.
Gold has long been a prized asset, offering a hedge against inflation and market volatility. But for many investors, the prospect of capital gains taxes on selling physical gold can be a deterrent.
Here, we explore one of the clever strategies to add gold to your portfolio while minimizing tax burdens:
Sovereign Gold Bonds (SGBs):
These government-issued bonds are a popular option in India.
They offer investment in gold at the prevailing market price, with the added benefit of interest payments.
But the real game-changer? Capital gains tax is exempt if you hold the SGBs till maturity.
SGBs having additional benefit to earnings of 2.5% interest on invested amount.
There’s usually a lock-in period of 5 years with an 8-year term, so plan accordingly.
Early Redemption after 5 Years You can get your money back, but capital gain will be taxed.
Similar to early redemption, Selling on the exchabge before maturity will result in taxable capital gains.
Hold your SGBs for the entire 8 Years and enjoy tax-free returns! No Capital gains tax to worry about.
However, the annual interest you receive on SGBs is taxable as per your income tax slab rate.
Remember:
- Conduct your research and understand the risks involved with this investment option.
- Consider your investment horizon. Long-term holdings may benefit from lower capital gains tax rates.
- Consult a financial advisor for personalized guidance based on your financial goals and tax situation.
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