Akshaya Tritiya: Buying gold today? From taxes to hallmark, must-know these 5 points
Gold seems like an amazing thing to buy but it also comes with few taxes attached to it.
Gold seems like an amazing thing to buy but it also comes with few taxes attached to it. Apart from that, many needs to make their buying in yellow metal accurate and safe. Because nobody likes to have impure gold in their hand and waste their hard-earned money. Here, we will discuss what are the few factors which one needs to take care before buying gold this Akha Teej.
The price of yellow metal change on daily basis in India. Few factors that derive these prices are US spot gold, currency fluctuations, global market conditions and inflation. Not many are aware, but gold is bought as hedge against inflation. When inflation is down then gold prices are on downward trend and vice versa.
There are two types of gold prices namely for 22 carat and 24 carat. On Akshaya Tritiya, the gold price of 22 carat in 10 and 100 gram is priced at Rs 30,900 and Rs 3,09,000 in Mumbai. As for 1 and 8 gram in the sama carat, the price is set at Rs 3,090 and Rs 24,720.
In case of 24 carat in Mumbai, the price of 10 and 100 gram gold is at Rs 31,900 and Rs 3,19,000. Whereas, the gold in 1 and 8 gram is available at Rs 3,190 and Rs 25,520 respectively.
22 carat, 24 carat:
The price of 22 carat is lower compared to 24 carat. But the latter is seen to be almost 100% pure gold usually considered as 99.99%. However, the problem is that 24 carat which comes with high purity is usually not good for making jewellery because they are brittle and will break it. Hence, here 22 carat comes as best option as they have 91.6% purity. If you are planning to make gold bars and coins, then 24 carat is your resort.
Before buying gold from any jeweller, you must make sure the metal has the Bureau of Standards (BIS) certified. You can find the hallmark somewhere below or back of the gold. This marking reveals that your gold is pure and has been made following standard procedures. Hence, chances of fake gold here gets eliminated.
Apart from hallmark, one should also check for the year on which the hallmarking was done. It is advisable to rather buy gold from a reputed shop, then your neighbourhood ones. Hallmarking centres are very few in the country, and hence, possibilities are not many jewellers are following the procedure.
The impact of US market on Indian gold is massive. When the US Federal Reserves hike policy rate, this motivates many foreign investors to remove their investment from other markets including India. For the investors US market becomes more attractive, as they may earn more interest over there.
Hence, when Fed hikes rates, yields on savings account and bonds rises, which in return, impact golds and make them a weaker proposition for investors resulting rates to plunge. At present, the US central bank has maintained its benchmark rate in a target between 2.25% to 2.5%.
When rupee is on appreciating level against US dollar benchmark at interbank forex market, it is a good sign for gold prices. The country buys gold from overseas, and hence, when US dollar is strengthening against rupee this makes it gold expensive. At present, Indian rupee is trading near 69-level against US dollar. Last year, the domestic currency was in free fall, depreciating to a new low of 75 versus dollar.
Making charges, import duties and production cost all have their impact on gold prices. After oil, India’s second largest import is in gold. Thereby, as demand is primarily fulfilled through gold imports, the import cost affect the local prices. Higher the import duty, higher will be the price of gold. Currently, the gold import duty is set at 10%, which many gems and jewellers have been demanding to be reduced.
Then comes the production cost, which is increased by the mining companies. The higher cost is passed on to customers. Apart from this, making charges varies from the type of gold and jewelry you are buying, because of carat, grams, shops, man-machine or machine etc.
As per the Income Tax guidelines, if a total wealth held by individual, Hindu Undivided Family (HUF) or company exceeds the amount Rs 30 lakh, then a 1% tax rate is levied on the amount exceeding Rs 30 lakhs. This means, below Rs 30 lakh is tax exempt.
According to section 3 of Wealth Tax, “shall be charged for every assessment year commencing on and from the 1st day of April, 1993, [but before the 1st day of April, 2016], wealth-tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company, at the rate of one percent of the amount by which the net wealth exceeds fifteen lakh rupees.”
But the provision also says, in the case of every assessment year commencing on and from the 1st day of April, 2010, the provisions of this section shall have effect as if for the words "fifteen lakh rupees", the words "thirty lakh rupees" had been substituted.
Gold, jewellery, bullion, silver, platinum or any other form of precious metal is considered as a component of wealth tax.
For example, if you bought gold worth Rs 31 lakh, then you will have to pay 1% tax. If failure to pay the amount, it can result in seizure of your gold as well.
It needs to be noted that, you can always file your wealth tax return on www.incometaxindiaefiling.gov.in.