Taxation on Electronic Gold Receipt…
Amendment in Section 2 for FY 2023 24.
47, there shall be included the period for which such gold was held by the assessee prior to conversion into
the Electronic Gold Receipt;
there shall be included the period for which such 25 Electronic Gold Receipt was held by the assessee
prior to its conversion into gold.”.
Now we understand the concept of electronic gold receipt:
What is electronic gold receipts?
Electronic Gold Receipts can be defined as depository gold receipts that can be traded on the stock exchanges.
Analysis of amendment :
Eg. Mr. Rajubhai is invest in EGR.
Option 1: He want invest in EGR by redeeming the physical gold.
Option 2: He want invest in EGR through demat account and take physical delivery after locking period of scheme is over.
Section 47 of Income Tax Act,1961 includes that matter which are not treated as transfer of capital assets. clause (viid) of section 47 included via Finance Bill, 2023, which say that conversion of your physical gold into EGR or your EGR to physical gold is not treated as transfer of capital asset. As it’s not considered as transfer of capital asset transaction the question of capital gain is not arise in such transaction. No need to pay any taxes on such transaction.
Government with aiming initiative to encourage more people to invest in gold vault route instead of buying physical gold. Concept of EGR receipt is now popular among young investors for no worries about safety of physical gold, Realtime valuation of your gold is assured and you can buy gold in smaller value of Rs.100/- also. EGR is more convenient and secure way of of investing.
In our example both the option 1 and/or option 2, Rajubhai do not have any tax liability in any of the transactions, as it’s not treated as transfer of capital assets.
Tax liability is arise only if Rajubhai sold that EGR or physical gold.
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