Gold Sellers Must Pay Attention to Taxes, Not Just Price Gains
When gold prices rise, some people consider selling their old gold jewellery to buy new. This can result in substantial capital gains, but it's essential to factor in the taxes owed on those profits.
According to Abhishek Soni, CEO & co-founder of Tax2win, if gold jewellery has been held for more than 24 months, the profit is treated as long-term capital gain (LTCG) and taxed at 12.5%, without indexation. If it's sold within 24 months, the gain is treated as short-term capital gain and taxed at the applicable income-tax slab rate.
The tax calculation depends on the original purchase cost and date of purchase, not just the current value of the old gold. For example, if you sell gold worth Rs 10 lakh that has been held for more than two years, you may need to pay approximately Rs 1.05 lakh in capital gains tax.
In addition to capital gains tax, buyers will also have to pay Goods and Services Tax (GST) along with making charges when purchasing new jewellery.