Gold selling alert! Want to get cash from your yellow metal? Must know this important fact to avoid losses
Gold price is rising and making new highs on a daily basis for the past some days. In such a scenario, those who have investments in physical gold may think of booking profit.
Gold price is rising and making new highs on a daily basis for the past some days. In such a scenario, those who have investments in physical gold may think of booking profit. But, before landing at the goldsmith shop for selling gold, one needs to know that there is a limit of Rs 10,000 beyond which a goldsmith can't offer cash to a gold seller. So, those who believe they can accept up to Rs 2 lakh cash in one transaction should know this fact before making any decision to sell gold.
Speaking on the limit beyond which one should not accept cash from a goldsmith, Balwant Jain, a Mumbai-based tax and investment expert said, "When an individual goes for selling one's physical gold to a gold smith, the transaction comes under business to individual category. In this category, the gold smith is a businessman and as per the Income Tax rule, there is a cap of Rs 10,000, beyond which payments in cash can’t be made for any expenditure to a single person." So, a gold smith can't pay an individual more than Rs 10,000 and hence while selling gold, one should not accept more than Rs 10,000 in cash form from the gold smith.
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Advising gold sellers not to get confused with the Rs 2 lakh limit on receiving cash SEBI registered tax and investment expert Jitendra Solanki said, "Under Section 269ST of the Income Tax Act, there is blanket ban on receiving cash beyond Rs 2 lakh. This restriction is applicable to the recipient and not the payer. The restriction is applicable in respect of receipt of money for each occasion or for each transaction and not necessarily for payment in a single day. This provision has been brought in to curb use of black money on various occasions like marriage, travel, etc., and for which no deduction is claimed by the payer under the tax laws." However, Solanki maintained that this restriction comes into play when both are individuals. Since, selling of gold is being done with a businessman, hence the cash limit comes down to Rs 10,000 and one can't accept beyond this from the gold smith. He also advised gold sellers to receive invoice from the gold smith while selling one's gold.
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