Budget 2024: Gold investments draw 12.5% long term capital gains tax instead of 20% with indexation

Union Budget 2024 has reduced the holding period for capital gains on gold as long term capital gains to 24 months and brought down the LTCG tax 12.5 per cent

The Union Budget 2024, presented by finance minister Nirmala Sitharaman on Tuesday, reduced the Long Term Capital Gains (LTCG) tax on gold investments from 20 per cent to 12.5 per cent.

Union Budget 2024 has reduced the holding period for capital gains on gold as long term capital gains to 24 months and brought down the LTCG tax to 12.5 per cent from 20 per cent with indexation

The holding period for investing in gold as long term capital gains has been brought down from 36 months to 24 months. Further, the benefit of indexation for LTCG calculation on gold has been removed.

Under the previous rules, indexation i.e. adjustment of price for inflation was allowed while calculating long term capital gains on the sale of gold or gold jewellery.

Indexation allowed for the reduction of taxable capital gains by increasing the cost of acquisition price as per an index which tracks changes in inflation.

Before the changes made by the Union Budget, you had to own gold for 36 months before capital gains on it's sale would count as long term and would get taxed at 20 per cent.

Now, a flat rate of 12.5 per cent will be available on long term capital gains on gold sold after 24 months. The existing income tax slab rate will still be applicable to those who have short term capital gains on gold.

The new rules for capital gains on gold are applicable from July 23, 2024.

The finance minister, Nirmala Sitharaman, also increased tax rates for all financial and non-financial assets to 12.5 per cent from 10 per cent earlier. The tax rates on short term capital gains have also increased from 15 per cent to 20 per cent.