The physical gold that you buy from your jeweler which can be in the form of gold jewelry, gold bars, gold coins is considered as Capital Asset and shall be taxable as follows:

  • If the assets are held by you for a short-0term, which means for a period less than 3 years, any capital gain arising on sale of these assets shall be called as a short-term capital gain (STCG) and will be charged to tax as per the normal income-tax slab of the taxpayer.
  • If the assets are held by you for long-term i.e. period exceeding 3 years, any capital gain on sale of such asset shall be called Long-term Capital Gain (LTCG) and will be taxed @20% if indexation benefit has been given. However, if no indexation benefit is given the applicable tax rate shall be 10%.

Under gold monetization scheme bonds, the government issues bonds to its customers in exchange for physical gold deposit. The bond-holder earns interest on these bonds and also derives benefits of capital appreciation in the value of the gold bond.
Any interest that is earned on this investment shall be exempt from tax. Moreover, any capital appreciation that happens to these bonds shall also stand exempted from tax.

For tax saving options, investors generally use the gold monetized certificate as capital appreciation is at pace with the market and investors also receive fixed income in the form of interest.