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Your guide to investing in gold as an NRI
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Know the investment options in gold for NRIs
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Documentation, taxation and repatriation rules of gold investments
The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of January 15, 2024.
An investment opportunity worth its weight in gold
Indians have a strong cultural and historical affinity for gold, which has translated into a significant interest in gold investments across generations. Both residents and Non-Resident Indians (NRIs) see gold as a way to protect their wealth from inflation and economic uncertainties.
Please note that you do not need a Portfolio Investment Scheme (PINS) account to invest in any gold instrument.
As an NRI/Person of Indian Origin (PIO)/Overseas Citizen of India (OCI), you can invest in gold in India. The avenues include:
1. Gold Exchange-Traded Funds (Gold ETFs)
Gold ETFs allow you to invest in gold in a dematerialised format. One unit of gold ETF is backed by one gram of physical gold with 99.5% purity. There is transparency on the trading price of gold ETFs as they are directly linked to the physical prices of gold. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd (BSE) like a stock of any company. They can be bought and sold on these exchanges using a demat and trading account. To know more about NRI demat accounts, click here.
You can invest in gold ETFs with funds from either your NRE or NRO bank accounts. Your investments in Gold ETF shall be done through Non-PINS account only.
2. Gold mutual funds
Gold mutual funds are fund of funds that invest in various forms of gold, such as physical gold, gold ETFs and/or related assets. You can invest in gold mutual funds directly from a fund house or through distributors such as banks, brokerage firms etc. If you wish to hold gold mutual funds in digital form, you will require a demat and trading account. You can invest in gold mutual funds with funds from either your NRE or NRO bank accounts. Your investments in gold mutual funds shall be done through Non-PINS account only.
3. Digital gold
Digital gold is a way of purchasing gold in a digital format. Every investment is backed by investment in 24 karat physical gold. They are tradeable on the National Spot Exchange Limited (NSEL). You will need a demat account with a registered brokerage firm to invest in them. Investors can buy and store this is in a demat form and if they wish, they can also redeem digital gold to take physical delivery of the gold.
4. Physical gold
You can invest in physical forms of gold such as gold jewellery, coins and bars.
Did you know?
As an NRI, you are not allowed to make any new investments in Sovereign Gold Bonds (SGBs) as per the Reserve Bank of India (RBI) and the prevailing FEMA guidelines.
However, as a resident Indian, if you had invested in SGBs in the past, you are permitted to hold them up to their maturity or opt for an early redemption. Typically, SGBs have a maturity of eight years with an exit option after five years of completion.
Tax implications on NRI gold investments
The taxability of your gold investments depends on the nature of transaction and the instrument used i.e., physical gold, or digital gold (gold ETFs, digital gold and gold mutual funds). On sale of such assets, you will be liable to pay capital gains tax in India either short-term, or long-term depending on the period of holding.
Gold investments received by way of gifts/inheritance from relatives (defined under section 56 2(vii) of the Income Tax Act, 1961) is not taxable. If you receive the above mentioned gold assets worth more than ₹50,000, as a gift from non-relatives, then taxes need to be paid on the aggregate value of such assets and not only excess value over ₹50,000. To know more about taxation rules on gifts and inheritances, click here.
Gold investments will be taxed as follows:
Please note, tables are best viewed on desktops or in landscape mode on mobile phones.
| Particulars | Taxability | Tax rates |
|---|---|---|
Sale of physical gold/digital gold |
Short-term capital gain: If asset is held for less than 36 months |
At the prevailing income tax slabs rates |
Long term capital gain: If asset is held for more than 36 months |
20% with indexation |
|
Sale of gold ETF/gold mutual funds (debt-oriented) which were purchased before April 1, 2023 |
Short term capital gain: If asset is held for less than 36 months |
At the prevailing income tax slab rates |
Long term capital gain: If asset is held for more than 36 months |
20% with indexation |
|
Sale of gold ETF/gold mutual funds (debt-oriented) which were purchased after April 1, 2023 |
Irrespective of the holding period, the gains on sale of such assets will be taxable as short-term capital gain |
At the prevailing income tax slab rates |
Source: Part I of First Schedule of the Finance Act, 2023 and Section 112 and 50AA of the Income Tax Act, 1961.
Additional surcharge and health and education cess is applicable on the above rates.
In case of conversion of physical gold to digital gold or vice versa, the date of acquisition of the new asset would be considered as the date when the original asset was purchased. Please note, such a conversion shall not be considered as 'transfer' for capital gains tax purposes.
Repatriation of funds
If you have invested in gold through a Non-Resident Ordinary (NRO) account, then the gains from sale of gold investments (like gold mutual funds, ETFs, digital gold etc.) are classified as capital income and can be repatriated up to USD 1 million annually cumulatively across asset classes. Dividends received on gold investments are classified as current income and can be repatriated freely. On the other hand, if the investments are made from your Non-Resident External (NRE) account, you can repatriate the proceeds of redemption of funds (principal and gain, net of taxes) without any limits.
Conclusion
There are many ways for NRIs to invest in gold in India such as physical gold, gold ETFs, digital gold and gold mutual funds. However, you are not permitted to invest in sovereign gold bonds. You should consult a tax expert to understand the tax implications on your gold investments.
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Disclaimer:
The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/ services of third parties.
