India’s government is now seeking to strengthen gold taxation after a spike in imports occurred after July when the customs duty was decreased. This was reduced from 15% to 6% to encourage increased local processing of gem and jewelry industry’s goods. But this step resulted in raising gold imports by 104 % in August 2024 and up to INR 86000 crore (USD 10.06 billion) as compared to jewelry and gems imports where export value decreased more than 23% during the same month and was up to INR 17000 crore (USD 1.99 billion).
This seems to have shifted after the duty reduction triggered an increase in imports, indicating that the value-added exports did not improve as expected. As a result, measures such as the review of customs duty on gold to control its import and encourage the export of value-added products are being contemplated by the government.
Apart from custom duties, they should also know about the income tax aspects of selling gold jewelry. The money gained from selling gold is taxable at capital gains tax. If the jewelry is sold after holding it for more than three years, it’s a long-term capital asset and taxes are charged at 20% with the benefit of regulation. In the short-term gains, which are from the holding period of up to three years, the gains are charged at the taxpayer’s residential tax rate.
Key Points for Gold Sellers:
– Long-Term Capital Gains (LTCG): Worthy for gold held over three years; taxed at 20% with indexation allowed.
– Short-Term Capital Gains (STCG): For gold held for three years or less; charges at the rate of Income Tax slab rates.
– Exemptions: Investing the amount in the purchase of residential property within a specified time may be eligible for tax exemptions under Sections 54 and 54F of the IT Act.
Jewelers and any individual or businesses who deal with the substance should be knowledgeable about any changes in the policy to abide by the new laws as well as plan their budgets well.