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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
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.
As an NRI, a Person of Indian Origin (PIO), or an 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, which can be bought and sold on the stock exchange just like shares. One unit of Gold ETF is backed by one gram of physical gold with 99.5% purity (as per Securities and Exchanges Board of India (SEBI). The unit price of any ETF is typically linked to the price of one gram of 24k 99.5 gold trading domestically. There is transparency on the trading price of gold ETFs as they are directly linked to the physical prices of gold in India.These provide returns proportional to the returns on gold. and are good options if your investment window is shorter.(verify and reword)
Gold ETFs are a popular investment option for NRIs who want to invest in gold. They are traded on the stock exchange, so you can buy and sell them easily. YYou can also buy gold ETFs directly through fund houses or brokerage firms.
To invest in gold ETFs through a brokerage firm, through a brokerage firm, you will need to open a demat account compulsorilyand a. Additionally, as per the prevailing Foreign Exchange Management Act (FEMA) regulations, you will need a P Portfolio Investment NRI Scheme (PINS) account as required . under the prevailing Foreign Exchange Management Act (FEMA) regulations. However, if you invest in gold ETFs directly through a fund house, you do not need a demat account under the portfolio investment scheme.
To know more about NRI demat accounts, click here
2. Gold mutual funds
Gold mutual funds are fund of funds or gold funds that primarily/entirely? invest in various forms of gold, such as physical gold, gold ETFs, and/and or related assets. (to be verified). You can invest in gold mutual funds directly from a fund house or an Indian stock exchange (through a broker). In case you purchase gold mutual funds directly through a fund house, you need not open a demat account under the portfolio investment scheme. However, if you invest in gold mutual funds through an Indian stock exchange (through a broker), you will mandatorily need to open a demat account under the portfolio investment scheme.
3. Digital gold
E-goldDigital gold is a type of digital currency backed by gold. Every investment is backed by investment in 24 karat physical gold. They One unit of e-gold is equivalent to one gram of physical gold. They are tradeable on the National stock Spot Eexchange 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.
The below content is purely for informational purposes and is not intended to constitute advisory of any kind. The position reflected in this article has been updated as of November 15, 2023.
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 e-gold, and gold 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* is not taxable. Basis Income Tax rules, if you receive the above-mentioned gold assets (physical or digital gold) worth more than ₹50,000 as a gift from non-relatives, then taxes need to be paid on the excess value. To know more about taxation rules on gifts and inheritance, click here
Gold investments will be taxed as follows:
Please note, tables are best viewed on desktop and in landscape mode on mobile phone
| 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
Once you have invested in gold, you can buy, sell, and repatriate the proceeds using Non-Resident Ordinary (NRO) or Non-Resident External (NRE) accounts. If you have invested in gold through a Non-Resident Ordinary (Nn 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 beYou are permitted to repatriated capital incom (including proceeds from maturity of FD, sale of property, redemption of mutual funds, and shares) up to USD 1 million annually cumulatively across asset classes. from your NRO account. Dividends received on gold investments are classified as current income and can be repatriated freely(including rent, dividend, pension, interest etc.). On the other hand, if the investments are is made on a repatriable basis from your Non Resident External (NRE) account, you can repatriate the proceeds of redemption of funds (principal + gains) without any limits..limits (if the investment was made originally using funds from this account).
Conclusion
There are many ways for NRIs to invest in gold in India such as physical gold, gold ETFs, e-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 are meant solely for informational purposes. The same is generic in nature and is not intended to serve as a substitute for specific advice on any matter whatsoever. This information along with the applicable regulatory/statutory/ other norms is subject to updation, completion and verification from time to time. This information is 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/registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect liability incurred in connection with decision(s) 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.
