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Buying gold? You must keep gold receipts safe for income tax purposes

New Delhi: Gold buying is among big-ticket purchases, therefore, it is important to preserve the receipts or bills of your purchase. One might think that keeping the gold bills safe is of no use, but it is important to note that from the bill, you can check the jewelry’s weight, date of purchase, price of the article or any other information related to the jewelry.

Aside from this, keeping the gold purchase bills safe will help you at the time of income tax return filing, where you might have to explain the source of purchase. According to Balwant Jain, tax and investment expert, “Under circular dated December 1, 2016, the Central Board of Direct Taxes (CBDT) had instructed the officers not to seize gold ornaments and jewellery up to 500 grams for married lady, 250 grams for unmarried lady and 100 grams for male member of the family. To the extent of these limits though the income tax department will not seize the gold ornament, in my opinion, you still may have to explain the source for the purchase of such jewelry.”

So, in case you have been buying gold jewelry from your taxable income, you need not worry about your gold holding but it is advisable to preserve the invoices of such jewelry purchases. Even in cases where your existing jewelry has been exchanged for other jewelry, please preserve the invoice for labor charges along with the invoice for the original purchase.Please note that it is not necessary that the gold jewelry should have been purchased through cheques or credit/debit cards even if the jewelry has been purchased in cash and the same has been purchased out of your taxable income, you need not worry, Jain further added.

How gold jewelry is taxed-

According to the existing income tax laws, the taxation of the physical gold (jewelry, coins, gold bars) depends on how long you have held them. The capital gains arising from the sale of the gold will be short-term or long-term depending on the time duration for which the gold has been held. The capital gains on sale will be classified as short-term if the difference between the date of buying and selling is less than three years or 36 months. The short term capital gains will be added to your gross total income and taxed at the income tax rates as per your income tax slab.

However, if the difference between the buying and selling is more than 36 months then these gains are classified as long-term and will be taxed at 20per cent along with surcharge, plus cess at 4 per cent with the indexation benefit. And you will also be charged with 3 per cent GST on the value of the gold plus making charges at the time of buying.

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