Tag: GOLD

Income Tax Department takes major action in Hyderabad, busts ₹20,000 crore gold laundering racket

Major Gold Laundering Racket Uncovered in India

The Income Tax Department has uncovered a massive gold laundering racket worth nearly Rs. 20,000 crore during raids on leading bullion firms in Telangana and Andhra Pradesh. The crackdown has exposed how black money was being converted into gold through thousands of small transactions that appeared legitimate on paper.

Officials confirmed that raids were carried out on three major bullion companies: DP Gold, CapsGold, and Yash Oro (Yashora). DP Gold, which is based in Nellore and has expanded its operations to Hyderabad, Vijayawada, Mumbai, and Chennai, was at the center of the investigation. The company, owned by Dilip Kumar Jain and associates, reportedly handled gold worth thousands of crores each year.

Investigators found that unaccounted cash was turned into gold by slicing gold biscuits into smaller pieces of 20 grams. These were wrapped in paper and sold in small transactions, each purchase deliberately kept below Rs. 2 lakh. This strategy allowed the traders to bypass the rule that requires buyers to provide their Permanent Account Number (PAN) for higher-value purchases. By repeating such small sales thousands of times, the companies created an artificial trail that masked huge volumes of untaxed trade.

Raids were also conducted at CapsGold’s offices in Banjara Hills, Secunderabad, and Abids, along with the homes of its directors. Established in 1901, CapsGold is one of India’s oldest and largest bullion merchants. The search also extended to the Vasavi Real Estate Group, as one of its promoters is related to a director at CapsGold.

At Yash Oro in Banjara Hills, run by brothers Ritesh and Rajesh Naredi, investigators uncovered how small operators deposited cash and created fresh bills to launder money. In one suspicious case, a refinery sold gold worth crores to a penny stock pharmaceutical company in Gujarat, which trades at less than one rupee per share. Officials also found that in several instances, gold was formally purchased from banks but the funds eventually circled back as repayments, suggesting cash was the real medium of exchange.

During the raids, officials seized more than Rs. 1 crore in cash. Authorities believe the uncovered scheme resembles methods seen during the demonetisation era, when traders used fragmented transactions to conceal large volumes of black money. The Income Tax Department has stated that it will continue tracing the money trail to expose everyone involved in this racket.

Karnataka Congress MLA KC Veerendra Arrested in Major Illegal Betting Scandal Involving Rs 6 Crore in Gold and Cash

Karnataka Congress MLA KC Veerendra Arrested for Alleged Involvement in Betting Scandal

The Enforcement Directorate (ED) arrested Karnataka Congress MLA KC Veerendra in Gangtok on Saturday, implicating him in illegal online and offline betting activities. Veerendra, along with his associates, allegedly traveled to Gangtok for the purpose of leasing land for a casino.

This arrest follows a significant raid carried out by the anti-money laundering agency on 30 premises linked to Veerendra, resulting in the seizure of approximately Rs 12 crore in cash. This amount included nearly one crore in foreign currency, gold jewelry valued at around Rs 6 crore, and about 10 kgs of silver articles. Additionally, four vehicles were confiscated during the operation.

As part of the ongoing investigation, the ED has also frozen 17 bank accounts and two bank lockers associated with Veerendra. Crucially, property-related documents were seized from the locations belonging to his brother, KC Nagaraj, and his son, Pruthvi N Raj. Reports indicate that Veerendra’s associates, including his brother KC Thippeswamy and Pruthvi N Raj, were allegedly managing online gaming operations from Dubai. Incriminating materials discovered during the searches suggested “complex layering of cash and other funds.”

Veerendra has been brought before a Gangtok judicial magistrate to further identify the alleged proceeds of crime. Concurrently, the ED has conducted searches at five casinos in Goa—Puppy’s Casino Gold, Ocean Rivers Casino, Puppy’s Casino Pride, Ocean 7 Casino, and Big Daddy Casino—linked to Veerendra as part of the money laundering investigation.

Sources revealed that Veerendra is reportedly operating multiple online betting sites, including King567, Raja567, Puppy’s003, and Rathna Gaming. Furthermore, his brother, KC Thippeswamy, is said to manage three business entities from Dubai: Diamond Softech, TRS Technologies, and Prime9Technologies, which are connected to call centers and the gaming business of K C Veerendra.

The arrest of a sitting politician raises questions about the potential impact on future criminal activities. Will such actions deter similar conduct among public figures?

India discovers approximately 20 metric tonnes of gold in Odisha

The Geological Survey of India (GSI) has discovered potential gold reserves estimated to be between 10 and 20 metric tonnes across several districts in Odisha, including Deogarh, Keonjhar, Sundargarh, Nabarangpur, Angul, and Koraput.

This is a significant finding for India’s domestic gold resources, but it’s important to put it in context:

  • India’s Gold Consumption: India is one of the world’s largest consumers of gold, and its domestic production is very low. The country imports a massive amount of gold annually, typically in the range of 700-800 metric tonnes.
  • Impact on Imports: While the discovery in Odisha is valuable, it is unlikely to drastically reduce India’s reliance on gold imports. However, it does represent a strategic step toward leveraging domestic resources and could boost the state’s economy.
  • Commercialization: The Odisha government is taking steps to commercialize these findings, with plans to auction the first gold mining block in Deogarh. The GSI is also conducting further explorations to validate the resources and determine the grade of the ore.

This discovery highlights Odisha’s growing importance as a mineral-rich state, adding gold to its existing reserves of chromite, bauxite, and iron ore.

Income Tax Crackdown: Jewellers’ Accounting Tricks Exposed

Gold Price Surge Leads to Accounting Manipulations Among Jewellers

Amid spiralling gold prices, some jewellers have reportedly manipulated accounting rules to suppress profits and pay lower taxes. The Income Tax (I-T) department has identified several units that violated regulations by altering the way they value their inventories. This strategy has allowed these jewellers to record lower profits, sources informed ET. Allegations suggest that this has been ongoing for the past five to six years. Notably, one jewellery house has paid close to ₹100 crore in taxes on the suppressed earnings.

These jewellers have switched their valuation strategy from FIFO (first-in, first-out) to LIFO (last-in, first-out). This shift lowers the valuation of closing stock, which includes unused gold purchased as raw material, semi-finished products, and unsold finished jewellery. A lower closing stock value directly impacts profits—lower stock means lower profits, leading to a reduced tax obligation.

The I-T department suspects that numerous jewellers, capitalizing on the surge in gold prices, have adopted this tactic to evade taxes. Officials have been directed to investigate cases where LIFO has been utilized.

Under the FIFO method, older inventory is sold first, so the value of the remaining stock reflects the more expensive gold purchased or stocked later. This results in a higher pre-tax profit since the cost of goods sold is lower. Conversely, with LIFO, the latest purchases are sold first, meaning the remaining inventory consists of less expensive gold. In this case, a higher cost of goods sold results in lower profits.

Using LIFO constitutes a breach of the I-T Act, which mandates that businesses use either FIFO or the ‘weighted average cost’ method for inventory valuation since the 2016-17 assessment year. The constitutionality of this mandate has been upheld by the courts, which rejected pleas from jewellers pushing for the right to use the LIFO method.

In a rising market, selecting one method over another can significantly influence the timing of profit recognition, especially since gold prices have been steadily increasing in recent years. However, experts argue that profits are not directly generated from the closing stock itself. According to Ashish Karundia, founder of Ashish Karundia & Co., valuing unsold inventory at the end of an accounting period is merely a step in calculating trading results and does not inherently create profit.

With gold prices soaring since the pandemic—exacerated by geopolitical tensions and substantial purchases by central banks—many jewellers may have found the LIFO valuation tactic too tempting to resist. For context, the price of gold in India increased from ₹31,000 per 10 grams in 2019 to ₹35,000, later surging from ₹48,720 in 2021 to ₹77,913 in 2024, currently standing at ₹97,681.

The I-T office has the authority to examine the accounting systems of assessees to determine the appropriateness and accuracy of profit deductions from maintained account books. While ICDS II permits a third methodology for non-interchangeable items and project-specific goods, it clearly prohibits LIFO for large quantities of ordinarily interchangeable inventory items like jewellery. Paras Savla, a partner at KPB & Associates, emphasized that the chosen formula should reflect the most accurate representation of actual costs incurred in bringing inventory to its present location and condition, ensuring consistency in application across financial periods.

ARTICLE ON LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

(Prudent Requirements  under Income Tax Act on holding of Jewellery more than the limit prescribed by the CBDT)

FAQ on government’s recent thrust on tracking unaccounted monies and investments in Liquid Assets Such as Gold :-

The purpose of this article is to make aware about all the possible benefit available to the searched person(s) in respect of jewellery found during the course of search. In this article we will discuss the various issues in detail on the following topics:

1. Source of Investment in Gold or Gold Related Items

While buying gold, it is necessary that you should buy gold on proper invoices and retain your tax invoices for future requirement. You need not worry if you can explain the source of investment in gold. The Central Board of Direct Taxes (CBDT) has specified in its press release, dated 1 December 2016 that there is no limit on holding gold jewellery provided that the source of investment or inheritance can be explained. However, it is essential that the income of the assessee is in line with the quantity of gold held. Providing necessary proof for such possession will help in avoiding scrutiny from the income tax department. Otherwise, the assessing officer also holds the authority to confiscate the gold held.

2. Permissible Quantity of Holding of Gold

CBDT has clarified the prescribed quantity of gold considered as allowable. Gold within this limit will not be seized even at the time of search at the assessee’s premises. No proof is required for possession and investment for the below mentioned quantity of Gold.

DescriptionLimit Per Person in a Family
A Married Women500 gms
An Unmarried woman250 gms
A Male Member100 gms

Even a higher quantity of gold may be left unseized by the discretion of assessing officer based on the family customs and traditions etc. It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated.

The quantity mentioned above is applicable to individual taxpayers. When it comes to a single locker having jewels from multiple families, the limit will be an aggregate of each individual taxpayer. In this case, it is recommended to open joint locker accounts with the names of the taxpayers from each family. This way you can avoid confusion.

3. What type of document/proof is valid?

Proof of investment will help you in establishing the source of the investment in Gold. Apart from the tax invoices that you would keep, you may have to provide evidences in case of inheritance and gifts. In the case of inheritance or gift, it will be great if you can provide a receipt in the name of the initial owner of the item. Alternatively, you can also submit a family settlement deed, will, or a gift deed stating the transfer of such a commodity to you.

On the other hand, if there is no such document available, the officer will analyse your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not.

4. Powers of Income Tax Department under Section 132 of IT Act

Section 132 of the Act confers the highest power to the income tax department (‘Department’) to invade the privacy of a person. As per this section, a search and seizure action can be carried out, in the case of any person who is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed or would not be disclosed for the purpose of the Act. The department has the power to seize any such money, bullion, jewellery or other valuable article if found unexplained at the time of the search.

The power of the authorised officer to seize jewellery during the course of search is derived from clause (iii) of  Section 132 (1), which reads that the Authorized Officer should seize any such books of account, other documents, money, bullion, jewellery, or other valuable article or thing found as a result of such search. However, as per the proviso to the said clause, any bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business. It is pertinent to note that the seizure of jewellery mainly depends upon two situations:

a) when an assessee has disclosed such jewellery in a wealth tax return

b) when the assessee has not disclosed such jewellery in wealth tax return

If during the course of search action, jewellery is seized either from the residential premises or from the bank locker, in many such cases, searched person(s) are not aware of the benefits available to them under the Act, which is explained through the CBDT guidelines and the various judicial pronouncement of high courts as given here under:

5. Guidelines issued by the CBDT vide Instruction No. 1916 dated 11th May 1994

In the matter of seizure of jewellery as per the said guidelines, CBDT has laid down instances as to when jewellery found need not be seized. Such instances are as under:

I. In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized.

II. In the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized.

III. The authorized officer may be having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorizing the search at the time of furnishing the search report.

Summary of CBDT Guidelines on Holding Gold:-

No seizure of gold jewellery found during the course of the search, should be made by the Authorised Officer, when,

(a) Searched person has disclosed jewellery in its wealth tax return,

(b) Where the jewellery is within the prescribed limit i.e. 500 grams for married lady, 250 gram for unmarried lady and 100 grams for male members.

(c) Authorised Officer may exclude a larger quantity of jewellery from seizure having regards to status and customs of community to which they belong.

(d) It is pertinent to note that CBDT has laid down guidelines for the ‘seizure’ of the jewellery found during the course of the search. However, it has been in various judicial pronouncement, discussed below, that although CBDT instruction is a guideline for not carrying out seizure during the course of the search, it inter-alia indicates the intention that the jewellery to the extent specified in instruction should be treated as explained jewellery in the hand of the searched person.

67 Tranches of Sovereign Gold Bonds Issued by Govt Until FY25

The government has issued a total of 67 tranches of Sovereign Gold Bonds (SGBs) amounting to 146.96 tonnes of gold till 2024-25, Parliament was informed on Tuesday.

The outstanding value as on March 20, 2025, on issue price is Rs 67,322 crore for 130 tonnes of gold, Minister of State for Finance Pankaj Chaudhary said in a written reply.Redemption of SGBs is based on the prevailing market price, he said.

The government has maintained a Gold Reserve Fund (GRF) in the Public Account where the price and interest differential amount is credited in time, he said.The SGBs, in addition to other borrowing instruments, have been an instrument for raising resources for financing fiscal deficit, it said. However, in addition to these, SGBs also served the purpose of savings/financial instruments as an alternative to physical gold, he said.

Due to the recent gold price volatility and global economic headwinds, this form of borrowing has become relatively expensive.“Therefore, based on maturing and deepening of Indian G-Sec market, which helped in mobilising relatively low-cost borrowing, resources were not raised through SGBs in FY 2024-25,” he said.

Replying to another question, Chaudhary said, more than 52.07 crore loans have been sanctioned, as on February 28, 2025, under Pradhan Mantri Mudra Yojana (PMMY), since the launch of the Scheme.The average non-performing assets (NPAs) for amount disbursed is 2.21 per cent (as on December 2024) as per data uploaded by Member Lending Institutions (MLIs) on the Mudra portal, he said.

Sovereign Gold Bond 2025: RBI Reveals Premature Redemption Dates from April to September 2025

Sovereign Gold Bond (SGB) Premature Redemption Details from the RBI

The Reserve Bank of India (RBI) has issued a press release dated February 21, 2025, outlining the details of the Sovereign Gold Bond (SGB) tranches that are scheduled for premature redemption between April and September 2025. Additionally, the press release details a window for investors to submit requests if they wish to encash their SGB via premature redemption.

SGBs offer an opportunity to invest in gold digitally while earning interest, making them an attractive option for investors seeking security and stable returns from gold. Premature redemption of these bonds is allowed after completing five years from the bond’s issue date.

Schedule of SGBs Premature Redemption (April – September 2025)

Below is the list provided by the RBI regarding Sovereign Gold Bonds that are scheduled for premature redemption during the specified period.

Note: The premature redemption dates may change in case of unscheduled holidays. Investors are advised to be aware of the submission periods for redemption requests if they opt to redeem their holdings before maturity. The price for scheduled premature redemption will be based on the average closing price of gold for the previous week.

SGB Premature Redemption List (April – September 2025)

What are Sovereign Gold Bonds?

The RBI issues Sovereign Gold Bonds (SGBs) as government securities on behalf of the Indian government. These bonds are denominated in grams of gold and provide an alternative to holding physical gold while offering periodic interest.

Who is Eligible to Invest in SGBs?

According to the SGB scheme rules, “Persons resident in India as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGB.” Eligible investors include individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions. Individual investors who subsequently change their residential status from resident to non-resident may continue to hold SGB until early redemption or maturity.

How to Invest in SGBs?

SGBs are issued in tranches (series) by the RBI at various times throughout the financial year. Investors can apply through:

By taking advantage of the SGBs, investors can secure their gold investments while earning interest, providing a valuable addition to their portfolios.

Big Update! Gold Smuggling Inside Nivea Cream and Tiger Balm Bottles at Airport!

Gold Smuggling Inside Nivea Cream and Tiger Balm Bottles at IGI Airport!

In a remarkable display of vigilance and expertise, the officers of Airport Customs, IGI Airport, Terminal-3, New Delhi, successfully intercepted an elaborate gold smuggling attempt on January 22, 2025.

🌍 The Case in Brief:
An Indian passenger arriving from Riyadh on flight AI 926 (dated January 21, 2025) was stopped based on spot profiling.

🕵️‍♂️ The Catch:
During the detailed examination of the passenger’s baggage and personal search, officers recovered:
🔸 18 pieces of rhenium-coated strips made of gold
🔸 Total weight: 318 grams
🔸 Concealment method: Hidden inside 4 Nivea cream boxes and 10 Tiger Balm bottles
🔸 Valuation: ₹23,76,471/- (Rupees Twenty-Three Lakh Seventy-Six Thousand Four Hundred Seventy-One Only)

📜 The Law in Action:
The passenger has been booked under Section 132 & 135 of the Customs Act, 1962, for:
🔹 False declaration and concealment of goods
🔹 Attempt to evade customs duty
🔹 Smuggling gold into India

The recovered gold has been seized under Section 110 of the Customs Act on the reasonable belief that it was liable for confiscation under Section 111 of the Act.

💡 Why This Matters:
Smuggling is not just an economic crime; it undermines the nation’s financial security. Thanks to the unwavering dedication of our customs officers, another attempt to bypass the law has been thwarted.

🔍 What’s Next?
Investigations are underway to uncover more details, including potential networks behind this smuggling attempt.

LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

(Prudent Requirements  under Income Tax Act on holding of Jewellery more than the limit prescribed by the CBDT)

FAQ on government’s recent thrust on tracking unaccounted monies and investments in Liquid Assets Such as Gold :-

The purpose of this article is to make aware about all the possible benefit available to the searched person(s) in respect of jewellery found during the course of search. In this article we will discuss the various issues in detail on the following topics:

1. Source of Investment in Gold or Gold Related Items

While buying gold, it is necessary that you should buy gold on proper invoices and retain your tax invoices for future requirement. You need not worry if you can explain the source of investment in gold. The Central Board of Direct Taxes (CBDT) has specified in its press release, dated 1 December 2016 that there is no limit on holding gold jewellery provided that the source of investment or inheritance can be explained. However, it is essential that the income of the assessee is in line with the quantity of gold held. Providing necessary proof for such possession will help in avoiding scrutiny from the income tax department. Otherwise, the assessing officer also holds the authority to confiscate the gold held.

2. Permissible Quantity of Holding of Gold

CBDT has clarified the prescribed quantity of gold considered as allowable. Gold within this limit will not be seized even at the time of search at the assessee’s premises. No proof is required for possession and investment for the below mentioned quantity of Gold.

DescriptionLimit Per Person in a Family
A Married Women500 gms
An Unmarried woman250 gms
A Male Member100 gms

Even a higher quantity of gold may be left unseized by the discretion of assessing officer based on the family customs and traditions etc. It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated.

The quantity mentioned above is applicable to individual taxpayers. When it comes to a single locker having jewels from multiple families, the limit will be an aggregate of each individual taxpayer. In this case, it is recommended to open joint locker accounts with the names of the taxpayers from each family. This way you can avoid confusion.

3. What type of document/proof is valid?

Proof of investment will help you in establishing the source of the investment in Gold. Apart from the tax invoices that you would keep, you may have to provide evidences in case of inheritance and gifts. In the case of inheritance or gift, it will be great if you can provide a receipt in the name of the initial owner of the item. Alternatively, you can also submit a family settlement deed, will, or a gift deed stating the transfer of such a commodity to you.

On the other hand, if there is no such document available, the officer will analyse your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not.

4. Powers of Income Tax Department under Section 132 of IT Act

Section 132 of the Act confers the highest power to the income tax department (‘Department’) to invade the privacy of a person. As per this section, a search and seizure action can be carried out, in the case of any person who is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed or would not be disclosed for the purpose of the Act. The department has the power to seize any such money, bullion, jewellery or other valuable article if found unexplained at the time of the search.

The power of the authorised officer to seize jewellery during the course of search is derived from clause (iii) of  Section 132 (1), which reads that the Authorized Officer should seize any such books of account, other documents, money, bullion, jewellery, or other valuable article or thing found as a result of such search. However, as per the proviso to the said clause, any bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business. It is pertinent to note that the seizure of jewellery mainly depends upon two situations:

a) when an assessee has disclosed such jewellery in a wealth tax return

b) when the assessee has not disclosed such jewellery in wealth tax return

If during the course of search action, jewellery is seized either from the residential premises or from the bank locker, in many such cases, searched person(s) are not aware of the benefits available to them under the Act, which is explained through the CBDT guidelines and the various judicial pronouncement of high courts as given here under:

5. Guidelines issued by the CBDT vide Instruction No. 1916 dated 11th May 1994

In the matter of seizure of jewellery as per the said guidelines, CBDT has laid down instances as to when jewellery found need not be seized. Such instances are as under:

I. In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized.

II. In the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized.

III. The authorized officer may be having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorizing the search at the time of furnishing the search report.

Summary of CBDT Guidelines on Holding Gold:-

No seizure of gold jewellery found during the course of the search, should be made by the Authorised Officer, when,

(a) Searched person has disclosed jewellery in its wealth tax return,

(b) Where the jewellery is within the prescribed limit i.e. 500 grams for married lady, 250 gram for unmarried lady and 100 grams for male members.

(c) Authorised Officer may exclude a larger quantity of jewellery from seizure having regards to status and customs of community to which they belong.

(d) It is pertinent to note that CBDT has laid down guidelines for the ‘seizure’ of the jewellery found during the course of the search. However, it has been in various judicial pronouncement, discussed below, that although CBDT instruction is a guideline for not carrying out seizure during the course of the search, it inter-alia indicates the intention that the jewellery to the extent specified in instruction should be treated as explained jewellery in the hand of the searched person.

Income Tax on Gold – Digital, Physical including jewellery, gold biscuits, ornaments, coins

Buying or selling physical gold entails all forms, including jewellery, gold biscuits, ornaments, coins, etc., and has historically remained a popular investment option. According to the Indian Income Tax Act, selling physical gold incurs a tax of 20%, along with a 4% cess on long-term capital gains (LTCG). Thus, the overall taxable rate on gold stands at 20.8%. However, this rate doesn’t apply to short-term capital gains.

Gold held for 36 months or more qualifies as long-term capital gains, while gold held for a shorter duration falls under short-term capital gains, taxed based on the individual’s income bracket.

There are many other considerations you need to keep in mind as far as physical gold goes:

1) Customs Duty

The government imposes customs duty, or import duty, on imported gold due to the substantial portion of the country’s gold demand being met through imports due to insufficient domestic gold mines meeting the demand. The majority of imported gold incurs customs duty. Recently, the Government of India (GOI) reduced the customs duty on gold bars from 12.5% to 10%. When combined with GST, the final tax on physical gold is 10% plus a flat 3% GST.

2) Agriculture Infrastructure Development Cess (AIDC)

The GOI collects AIDC for the nation’s development. A 5% AIDC is levied on gold imports, up from the recent 2.5%. When combined with import duty, GST, and AIDC, the overall tax on gold amounts to 18%.

3) Goods and Service Tax (GST)

GST applies to the sale of gold by jewellers or merchants, transferring this cost to the end consumer. A 3% GST is imposed on physical gold purchases. For instance, upon importing ₹1 lakh worth of gold, a 3% GST will be charged on the value of ₹1,15,000 (after adding import duty and cess), totalling an additional ₹3,450 and raising the cost to the customer to ₹1,18,450.

4) Making Charges and Associated GST

Making charges, although not classified as tax, apply to crafting gold into coins or jewellery, attracting additional GST. While this GST on gold expense might not be explicitly delineated, it’s included in the making charges section of the final bill during a gold purchase.

The GST levied on making charges stands at 5%. Assuming a minimum making charge of 8% for the above 1 lakh gold import example, resulting in charges of ₹9,200 on ₹1,15,000, and a 5% GST on these charges amounting to ₹460, the total cost would be ₹1,28,110.

5) Tax Deducted at Source (TDS)

For purchases of physical gold exceeding ₹1 lakh, a TDS of 1% is imposed. This amount can be adjusted against the annual tax liability.

Taxation on Selling Physical Gold

1) Short-term Capital Gains Tax (STCG)

STCG applies when gold is sold within three years of purchase. This gain is added to the individual’s income and taxed based on their income tax slab, such that, for instance, if one falls under the 30% slab, the gain amount (sale price minus purchase cost) will be taxed at 30%.

2) Long-term Capital Gains Tax (LTCG)

LTCG on gold gains sold after three years of purchase is 20%, with an indexation benefit used to adjust the purchase price reflecting inflation’s impact. This tax can be waived by using all the net proceeds to buy government tax-benefit bonds or invest in property within specific time frames.

3) GST on Jewellery Exchange

Exchanging gold jewellery involves nuances regarding taxation, requiring caution to prevent deception during transactions. Exchanging the same quantity of gold doesn’t attract GST. For instance, exchanging 100 grams of jewellery for another 100 grams incurs no GST on the gold, with charges applicable only for the difference in making charges and related taxes. Hence, vigilance is essential to ensure accurate taxation and prevent overcharges during exchanges.

Taxation on Digital Gold

Taxation on Digital Gold operates similarly to physical gold. The basic difference is in the mode of purchase – one can buy digital gold online and store it securely in vaults by the insurer. Regulatory bodies like RBI or SEBI lack jurisdiction over this investment avenue.

If you’re considering digital gold investments, you must be mindful that these purchases incur taxation following the income tax regulations governing gold investments, which is 20.8%, like physical or paper gold.The taxation structure for digital gold offerings includes the following:

Taxation on SGBs

SGBs offer a tax-efficient way to invest in gold, especially for those seeking to hold the investment for three to eight years. While interest income is taxable, the exemption from LTCG and the minimal GST liability make SGBs an attractive option compared to physical gold.

Short-Term Capital Gains (STCG)

  • Applicable if SGBs are sold within three years of purchase.
  • Added to an individual’s income and taxed based on the relevant tax slab.

Long-Term Capital Gains (LTCG)

  • Applicable if SGBs are sold at a profit after three years.
  • Taxed at 20% with indexation benefits or 10% without indexation.
  • Exempt if held till maturity (eight years).
  • Applies to individuals, not HUFs or Trusts.

Tax Advantages of SGBs

  • No GST or Charges: SGBs are considered securities and digital assets, exempt from GST.
  • Minimal GST Liability: STT and brokerage attract a maximum 0.75% GST.
  • No TDS: Tax Deducted at Source (TDS) is not applicable for SGBs.

Interest Income Taxation

  • Interest Rate: SGBs offer a 2.5% per annum interest rate.

Tax Liability: Interest income is added to your income and taxed according to your applicable tax slab.

Taxation on other Paper Gold

Unlike SGBs, these may not offer maturity benefits or physical redemption options.

  • Investment Types: Gold Mutual Funds and ETFs
  • Tax on Capital Gains:
    –     Long-Term Capital Gains (LTCG): 20.8% with indexation benefits.
    – Short-Term Capital Gains (STCG): Taxed according to your income slab.

Tax on Gold Derivatives

Similar to Commodity F&O Trading, the tax treatment may vary depending on the trading strategy and holding period.

  • Investment Type: Contracts based on gold price (commodities markets)
  • Tax Implications: Similar to commodity Futures and Options (F&O) trading.

Tax Advantages: Expenses can be offset against income if classified as

Tax on Gold Inheritance or Gift

This can be a little confusing, and it is to your advantage to consult a tax advisor for clarification on specific inheritance or gifting scenarios.

  • Tax Exemption: Gold received as a gift or inheritance from:
    – Parents
    – Spouse
    – Children (Section 56(2) of Income Tax Act)
  • Taxable Event: Gifts exceeding ₹50,000 from non-relatives (Income from Other Sources)
  • Wedding Gift Exemption: Gold jewelry received at weddings is tax-exempt, but subsequent sale triggers capital gains tax.

Tax for NRIs buying or selling gold

Certain rules apply when you are an NRI, so consult a tax advisor for specific tax implications and potential tax minimization strategies for NRIs.

  • Investment Restrictions: NRIs cannot invest in Sovereign Gold Bonds (SGBs).
  • Tax Rates: Similar to Indian residents.
  • Tax Deducted at Source (TDS): Applies to Gold ETF or mutual fund redemptions.
  • Short-term returns: 30% TDS
  • Long-term returns: 20% TDS

FAQs

Q1. How much gold is exempt from income tax?

Ans. In India, tax exemption on the amount of gold depends on how you receive it:

  • If you receive it as a gift or inheritance: Gold received as a gift or inheritance from close family members (parents, spouse, children) is exempt from income tax under Section 56(2) of the Income Tax Act, regardless of the quantity. However, gifts exceeding Rs. 50,000 from non-relatives are taxable as Income from Other Sources. Gold jewellery received at weddings enjoys tax exemption, but any subsequent sale is subject to capital gains tax.
  • If you purchase: When you purchase gold, there’s no direct exemption based on quantity. However, taxes are levied on capital gains when you sell the gold.


Q2. What is the income tax on sale of personal gold jewellery?

Ans. The tax you pay on selling gold depends on how long you’ve held it:

  • Sold within 3 years (Short-term Capital Gains): This is taxed as per your income tax slab. For example, if you’re in the 30% bracket, the profit from selling the gold will be taxed at 30%.
  • Sold after 3 years (Long-term Capital Gains): You pay a flat 20.8% tax, with an adjustment for inflation (indexation). This tax can be avoided if you invest the entire sale proceeds in government bonds or specific real estate investments within a set timeframe.

Exchanging gold jewelry generally doesn’t attract GST as long as you’re exchanging the same quantity of gold. However, you might pay tax on any difference in making charges or other fees associated with the exchange. 

Q3. Is digital gold more costly than physical gold?

Ans. Not really. Each case, whether it is digital gold or physical has its own set of considerations. Physical gold might be slightly cheaper upfront, but you’ll need to factor in making charges, potential customs duty and GST, and storage costs. Digital gold has management fees and a slightly wider spread, but eliminates storage worries and offers secure storage. So, the “cheaper” option depends on your priorities: convenience and security with digital gold, or potentially lower upfront cost with physical (considering long-term storage).

Q4.How much gold can you keep at home with proof?

Ans. According to the Central Board of Direct Taxes (CBDT), there are limits on how much gold individuals can hold without risk of confiscation. These limits vary depending on marital status and gender:

  • Married women: Up to 500 grams
  • Unmarried women: Up to 250 grams
  • Married and unmarried men: Up to 100 grams

Q5. How much gold is allowed without tax?

Ans. There’s no limit on the amount of gold you can hold, but tax applies when you can’t explain the source of income used to buy it. The Central Board of Direct Taxes (CBDT) outlines limits for unaccounted gold jewellery: women can possess up to 500 grams (married) or 250 grams (unmarried), and men can hold 100 grams.

Q6. What do you mean by a tax on gold?

Ans. Taxes on gold can involve various charges depending on the situation. These include customs duty on imported gold, Goods and Services Tax (GST) on purchase (applies to making charges, may vary), income tax on gold received as a gift exceeding Rs. 50,000, and capital gains tax when selling gold within 3 years of purchase.

Q7. Can I buy and sell gold without GST?

Ans. No, you’ll usually pay GST on the making charges of purchased gold. However, the actual gold itself may be exempt.

Q8. How to sell gold without paying taxes?

Ans. Selling gold generally incurs capital gains tax unless exempt. To potentially qualify for exemptions, consult a tax advisor on how long to hold the gold before selling. In some cases, selling inherited gold or owning it for more than 3 years might qualify for tax benefits.

 Q9. How to buy gold without tax? 

Ans. Completely avoiding taxes on gold is tricky, but there are ways to minimize them. Look into tax limits for small purchases. Consider buying pre-owned gold, though capital gains tax might still apply. Explore tax-advantaged options like gold ETFs or Sovereign Gold Bonds (if available) that might offer tax benefits. 

 Q10. How does one remain informed about the latest tax regulations on gold?

Ans. Government websites or consulting a tax professional are the best ways to stay updated on current tax rules and potential changes affecting gold purchases and sales.

Bought real gold by paying fake notes… Anupam Kher’s picture instead of Gandhiji’s on 1.30 crore notes

Ahmedabad: A shocking incident has come to light in Gujarat in a fake currency case. A deal of Rs 1.60 crore was struck in a gold purchase deal. The fake Rs 500 currency notes given to buy gold had a unique picture printed on them instead of Gandhiji’s picture. They were arranged in a systematic way just like currency bundles are made in banks. Instead of State Bank of India, Start Bank of India was written on the seal of these bundles.

A businessman from Manek Chowk has filed a police case regarding this entire matter. Ahmedabad police has taken cognizance of this fake currency case. Police suspect that the fraud gang may be from Rajasthan. Instead of Reserve Bank of India, Reserve Bank of India is written on these fake notes.

2100 grams of gold deal

Information received from the police has revealed that the fraudsters carried out a big fraud and bought real gold with fake notes. The fraudsters fled after deceiving the bullion trader. This entire fraud is worth Rs 1.60 crore. The trader got Children Bank notes in exchange for gold biscuits. Information has revealed that 2100 grams of gold was to be delivered between the two traders at Manek Chowk. It was decided to deliver the gold to Angadia firm located on CG Road and take cash. 3 accused were standing near Angadia firm with a note counting machine and notes. The accused had given Children Bank notes worth Rs 1.30 crore to the trader’s employees at the time of delivery of gold. The accused fled saying that count the remaining Rs 30 lakh from the adjacent office and bring it. When the businessman came to know about the incident, he lodged a complaint at Navrangpura police station.

Anupam Kher is also surprised

Anupam Kher has expressed surprise at the revelation of this shocking deal of buying real gold with fake notes in Ahmedabad, Gujarat. Anupam Kher has shared a video of a Gujarati channel and wrote. My picture in place of Gandhiji, anything can happen. Anupam Kher has added surprised emojis with this. Ahmedabad Crime Branch has started investigating this case.

RBI’s Sovereign Gold Bond: Profit Doubled by Latest Announcement

If you had invested in the first tranche of Sovereign Gold Bond 8 years ago, then there is good news for you. The Reserve Bank of India (RBI) has released the final redemption price on maturity of the first Sovereign Gold Bond (SGBs) issued on 5 August 2016. RBI has fixed this price at ₹ 6,938 per gram. In August 2016, it was issued at a price of ₹ 3,119 per gram. RBI has also fixed the final redemption date for this as 5 August 2024 (Monday).

The price of Sovereign Gold Bond is determined by the India Bullion and Jewelers Association (IBJA) on the basis of 999 purity gold. It is determined on the basis of the average closing price in the week before the subscription for SGBs opens.

One scheme, many benefits

SGBs holders also get 2.5% interest on it on an annual basis. In this way, investors get the benefit of interest along with the rising price of gold. Apart from this, there is also the benefit of tax exemption on the amount received on redemption. This is the reason why Sovereign Gold Bond is seen as an attractive investment option for investors. When the government announced this scheme, the annual interest was fixed at 2.75%, which was later reduced to 2.5%. Investors can also take a loan by keeping this as collateral in a bank or any other financial institution.

Total benefit to investors

Based on the initial investment, this interest is paid twice a year in two different parts. In this way, investors are getting a total benefit of 144% on the Sovereign Gold Bond issued 8 years ago. If seen on an annual basis, this return is about 12% CAGR. The final interest on SGBs will be issued directly in the bank account of the investors.

Will the Sovereign Gold Bond Scheme be closed?
It has been discussed in many media reports for some time that the Narendra Modi government is preparing to close this Sovereign Gold Bond Scheme. Information received by CNBC-TV18 from sources has told that the final decision on this will be taken in September. A decision was taken on this in the RBI meeting regarding borrowing in September 2024.

Government Fixes Tariff Value Of Some Imported Goods

Notification No. 15/2022- Customs (N.T.) Dated 8th March 2022

The Government has fixed tariff value of imported goods:

Crude Palm Oil

RBD Palm Oil

Others – Palm Oil

Crude Palmolein

RBD Palmolein

Others – Palmolein

Crude Soya bean Oil

Brass Scrap (all grades)

Gold (refer notification for detailed description)

Silver (refer notification for detailed description)

Areca nuts

This notification shall come into force with effect from the 9th day of March, 2022

Note : The principal notification was published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide Notification No. 36/2001 Customs (N.T.), dated the 3rd August, 2001, vide number S. O. 748 (E), dated the 3rd August, 2001 and was last amended vide Notification No. 12/2022 Customs (N.T.), dated the 28th February, 2022, e published in the Gazette of India, Extraordinary, Part II, Section-3, Sub-section (ii), vide number S.O. 900 (E), dated 28th February, 2022.

To Download the Notification, Please Click Here

Russia- Ukraine War Affect: Gold Crossed 53000, Silver Crossed 70000, Rupee Crashed

The war between Russia and Ukraine has intensified and this conflict has 12 days on Monday and its effect is visible on the stock market, from crude oil to gold prices. Due to the intensification of corrosion, the price of precious metals has also continued to rise. If you are planning to buy jewellery then it is important for you to know their latest prices first. On Monday, the price of gold on MCX crossed 53 thousand. It gained 1.99 percent and the price of gold has reached Rs 53,605 per 10 grams.

Silver has crossed 70 thousand

Where there has been a strong jump in the price of gold, on the other hand, the rise in the price of silver is also not taking its name to stop. Its price has crossed 70 thousand. On Monday, the price of silver rose by 2.37 percent. With this, the price of silver has increased to Rs 70,800 per kg.

Rupee collapses against dollar

While on the one hand there is a tremendous decline in the stock market, on the other hand, the Indian currency rupee opened with a weakness of 77 paise at Rs 76.93 against the US dollar on Monday. Significantly, on the last day of the last trading week, the rupee closed at Rs 76.16 with a weakness of 25 paise against the dollar on Friday. According to a report, so far this year the rupee has depreciated by 3.60 percent.

Government Declares Two Financial Products As Securities Under The Securities Contracts (Regulation) Act 1956

Vide Notification Dated 24th December 2021, the Department of Economic Affairs, Ministry of Finance has declared following two financial products as securities under the Securities Contracts (Regulation) Act 1956:

(i) bullion spot delivery contract; and

(ii) bullion depository receipt with underlying bullion.

The two financial products were notified by the notification number S.O. 2957 (E), dated the 31st August, 2020.

To Download the Notification, Please Click Here

ARTICLE ON LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

LIMIT ON HOLDING OF GOLD AS PER INCOME TAX ACT 1961

(Prudent Requirements  under Income Tax Act on holding of Jewellery more than the limit prescribed by the CBDT)

FAQ on government’s recent thrust on tracking unaccounted monies and investments in Liquid Assets Such as Gold :-

The purpose of this article is to make aware about all the possible benefit available to the searched person(s) in respect of jewellery found during the course of search. In this article we will discuss the various issues in detail on the following topics:

1. Source of Investment in Gold or Gold Related Items

While buying gold, it is necessary that you should buy gold on proper invoices and retain your tax invoices for future requirement. You need not worry if you can explain the source of investment in gold. The Central Board of Direct Taxes (CBDT) has specified in its press release, dated 1 December 2016 that there is no limit on holding gold jewellery provided that the source of investment or inheritance can be explained. However, it is essential that the income of the assessee is in line with the quantity of gold held. Providing necessary proof for such possession will help in avoiding scrutiny from the income tax department. Otherwise, the assessing officer also holds the authority to confiscate the gold held.

2. Permissible Quantity of Holding of Gold

CBDT has clarified the prescribed quantity of gold considered as allowable. Gold within this limit will not be seized even at the time of search at the assessee’s premises. No proof is required for possession and investment for the below mentioned quantity of Gold.

DescriptionLimit Per Person in a Family
A Married Women500 gms
An Unmarried woman250 gms
A Male Member100 gms

Even a higher quantity of gold may be left unseized by the discretion of assessing officer based on the family customs and traditions etc. It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated.

The quantity mentioned above is applicable to individual taxpayers. When it comes to a single locker having jewels from multiple families, the limit will be an aggregate of each individual taxpayer. In this case, it is recommended to open joint locker accounts with the names of the taxpayers from each family. This way you can avoid confusion.

3. What type of document/proof is valid?

Proof of investment will help you in establishing the source of the investment in Gold. Apart from the tax invoices that you would keep, you may have to provide evidences in case of inheritance and gifts. In the case of inheritance or gift, it will be great if you can provide a receipt in the name of the initial owner of the item. Alternatively, you can also submit a family settlement deed, will, or a gift deed stating the transfer of such a commodity to you.

On the other hand, if there is no such document available, the officer will analyse your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not.

4. Powers of Income Tax Department under Section 132 of IT Act

Section 132 of the Act confers the highest power to the income tax department (‘Department’) to invade the privacy of a person. As per this section, a search and seizure action can be carried out, in the case of any person who is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed or would not be disclosed for the purpose of the Act. The department has the power to seize any such money, bullion, jewellery or other valuable article if found unexplained at the time of the search.

The power of the authorised officer to seize jewellery during the course of search is derived from clause (iii) of  Section 132 (1), which reads that the Authorized Officer should seize any such books of account, other documents, money, bullion, jewellery, or other valuable article or thing found as a result of such search. However, as per the proviso to the said clause, any bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business. It is pertinent to note that the seizure of jewellery mainly depends upon two situations:

a) when an assessee has disclosed such jewellery in a wealth tax return

b) when the assessee has not disclosed such jewellery in wealth tax return

If during the course of search action, jewellery is seized either from the residential premises or from the bank locker, in many such cases, searched person(s) are not aware of the benefits available to them under the Act, which is explained through the CBDT guidelines and the various judicial pronouncement of high courts as given here under:

5. Guidelines issued by the CBDT vide Instruction No. 1916 dated 11th May 1994

In the matter of seizure of jewellery as per the said guidelines, CBDT has laid down instances as to when jewellery found need not be seized. Such instances are as under:

I. In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized.

II. In the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized.

III. The authorized officer may be having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorizing the search at the time of furnishing the search report.

Summary of CBDT Guidelines on Holding Gold:-

No seizure of gold jewellery found during the course of the search, should be made by the Authorised Officer, when,

(a) Searched person has disclosed jewellery in its wealth tax return,

(b) Where the jewellery is within the prescribed limit i.e. 500 grams for married lady, 250 gram for unmarried lady and 100 grams for male members.

(c) Authorised Officer may exclude a larger quantity of jewellery from seizure having regards to status and customs of community to which they belong.

(d) It is pertinent to note that CBDT has laid down guidelines for the ‘seizure’ of the jewellery found during the course of the search. However, it has been in various judicial pronouncement, discussed below, that although CBDT instruction is a guideline for not carrying out seizure during the course of the search, it inter-alia indicates the intention that the jewellery to the extent specified in instruction should be treated as explained jewellery in the hand of the searched person.