New Delhi: Investors who have made gains in gold or silver this year have an opportunity to lock in profits without significantly increasing their tax burden. With precious metals delivering strong returns, especially gold, many portfolios are sitting on sizeable unrealised gains. Instead of holding passively or redeeming without planning, investors can use smart tax strategies to improve post-tax returns before the financial year ends.
The taxation of gold and silver investments depends on how they are held. Gold and silver ETFs qualify as long-term capital assets after 12 months, attracting a 12.5 percent long-term capital gains (LTCG) tax. If sold earlier, gains are taxed as per the investor’s income slab. In contrast, gold and silver fund-of-funds require a 24-month holding period to qualify for long-term capital gains treatment. Understanding these holding periods is crucial before making any redemption decision.
One effective strategy is tax harvesting. This involves booking gains in gold or silver while simultaneously offsetting them with capital losses from other investments such as equities, debt funds, or other assets. Investors can also use losses carried forward from previous financial years to reduce their current tax liability. This approach allows them to reset their purchase cost at current market levels without increasing their overall tax outgo.
Another smart move is staggering redemptions across financial years. Instead of selling the entire holding at once, investors can spread redemptions over two financial years to distribute taxable gains. This can help manage overall tax exposure and avoid a spike in taxable income in a single year. Similarly, if any investment is currently at a loss, selling it before year-end can create losses that offset precious metal gains.
Ultimately, the goal is not to avoid taxes but to manage them efficiently within existing rules. With gold and silver experiencing significant price movements, strategic timing and careful planning can make a meaningful difference to net returns. Investors who review their portfolios proactively before the financial year closes may be able to lock in gains while keeping their tax burden under control.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: ZEE News
