The Finance Minister recently reduced the customs duty on gold from 15% to 6%. Additionally, the holding period for long-term capital gains tax on gold has been shortened from 36 months to 24 months. The tax rate for long-term capital gains on gold has also been lowered from 20% with indexation to 12.5% without indexation.
Shift to Gold-Related Instruments for Investment
Market experts suggest that investors looking to invest in gold should consider gold-related instruments like Sovereign Gold Bonds (SGBs) or Gold Exchange Traded Funds (ETFs) instead of physical gold. Gold ETFs are viewed as a better investment option compared to buying physical gold.
Sovereign Gold Bonds Still an Attractive Option
Although the customs duty cut might reduce the demand for SGBs, they remain a strong investment choice. Investors benefit from a fixed 2.5% annual interest, payable semi-annually, on the purchase value of SGBs.
