Gold has been a traditional medium of investment and savings. In earlier times people used to invest money in gold ornaments. Even today, there is a huge stock of gold in the form of ornaments in Indian homes. Now in the changed times, the nature of investing in gold has also changed. Along with the people of the new generation, many knowledgeable people are now preferring to invest in digital gold instead of gold jewelry i.e. physical gold. Now the government has also prepared a way to encourage such people.
These advantages of digital gold
First of all, let’s talk about the benefits of investing in digital gold. If you invest in physical gold in the traditional way then it has many disadvantages. There is a fear of security if you keep them with you, while keeping them in a bank locker costs money. Apart from this, even when you go to cash them when needed, you do not get the full amount. In the case of digital gold, all these hassles do not happen and it is also possible to cash them in a few minutes.
In this case tax will not be applicable
Now let us tell you a method, using which you can easily convert physical gold into digital gold and you will not have to pay any kind of tax for doing so. In fact, Finance Minister Nirmala Sitharaman (FM Nirmala Sitharaman) has made a proposal in the budget 2023. Under this, conversion of physical gold into electronic gold receipt (EGR) ie e-gold will not attract tax. Similarly, there will be no tax on converting electronic gold into physical gold.
Aim to promote e-gold
This announcement has been made in the budget to promote e-gold. According to the proposed amendment, if physical gold is converted into e-gold and e-gold into physical gold through a SEBI registered wallet manager, it will not be considered as transfer. Meaning it will not come under the ambit of capital gain. Capital gains tax will be payable only when electronic gold is sold on the stock exchange by the person who has converted it from physical gold to e-gold. Similarly, if an investor sells electronic gold after converting it into physical gold in the market, then he will have to pay tax only at the time of sale of physical gold. If e-gold is bought from the money received by selling gold, then capital gains tax will not have to be paid.
What is Electronic Gold Receipt (EGR) or e-Gold?
Electronic Gold Receipt is a type of receipt, which holds the value of gold. Like shares, e-gold requires a demat account. Like shares, they are deposited in your demat account and are traded on the stock exchange. E-gold kept in demat account can be converted into physical gold at the time of need. Bombay Stock Exchange launched EGR in October 2022.
How to convert real gold into e-gold?
The investor can convert the gold into e-gold by depositing it at the nominated delivery centre. After giving the gold, the depository receipt is deposited in the demat account. Then it can be traded. Meaning if you want you can sell it on the stock exchange. Well, similarly the EGR investor has to make a request to the depository to get the physical gold. The Wallet Manager converts EGR to Gold and can be obtained from the Vault Center.
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