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NRI Guide to Gold Investment in India

Explore the avenues of gold investment in India for NRIs, covering tax implications, investment options, and benefits.
min read
February 3, 2024

Introduction to Gold Investment for NRIs

Gold has traditionally been a favored investment in India, and for Non-Resident Indians (NRIs), it represents not just a cultural affinity but also a strategic asset. Investing in gold offers a hedge against inflation and currency fluctuations.

Why Gold Investment?

  • Cultural Value: Gold is deeply ingrained in Indian culture, making it a preferred investment.
  • Diversification: Gold provides a safety net against market volatility.
  • Inflation Hedge: Historically, gold has been an effective hedge against inflation.

Options for Gold Investment

  • Physical Gold: Includes jewelry, bars, and coins. Physical gold is subject to wealth tax if the total value exceeds Rs 30 lakh.
  • Gold ETFs (Exchange-Traded Funds): These offer exposure to gold prices without the need for physical storage.
  • Gold Mutual Funds: Funds that invest in gold ETFs or directly in physical gold.
  • Digital Gold: An option for NRIs to invest in gold without physical possession, like E-gold and Gold ETFs.

Tax Implications

  • Capital Gains Tax: Profits from gold investment are subject to short-term or long-term capital gains tax, depending on the holding period. Long-term gains (over 3 years) are taxed at 20% with indexation benefits.
  • Wealth Tax: Not applicable since its abolition in 2015.
  • TDS for NRIs: TDS is deducted at 20% on long-term capital gains from gold, but NRIs can claim a refund if the actual tax liability is lower.
  • GST on Gold Purchases: 3% GST applies, along with any making charges.

Sovereign Gold Bonds (SGBs)

  • Not for NRIs: NRIs are prohibited from investing in SGBs. If they had invested while being residents, they could hold them till maturity.
  • Interest Rate: SGBs offer a 2.5% annual interest rate.
  • Maturity Period: 8 years, with early exit options from the 5th year onwards.

Investment Process

  • KYC Requirements: PAN Card for investments above Rs 2 lakhs; a Demat account is required for ETFs and E-gold investments.
  • Consultation with Financial Advisors: Essential for understanding the nuances of gold investment, including tax implications in both India and the NRI's country of residence.

Conclusion: Strategic Asset for NRIs

Gold investment in India offers NRIs a blend of cultural affinity, financial security, and portfolio diversification. By understanding the various investment options and their tax implications, NRIs can make informed decisions, ensuring their investments align with their financial goals and risk appetite

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Aayush is a strategic growth marketer with over 6 years of experience working in the US and European markets for various financial services companies. He has a proven track record of success in helping businesses grow, increase revenue, and improve marketing strategies.

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