Budget 2023 | No capital gains if you convert physical gold to digital gold — How will you benefit?

With the new proposal in place, there will be no capital gains on the exchange. This will make safe-haven asset easier to access and promote investments in the electronic equivalent of gold, experts said.

"The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization. This announcement may help in reducing the import of gold,” said Colin Shah, MD, Kama Jewelry.

Any profit or gain that arises from the sale of a ‘capital asset’ comes under the category ‘income from capital gains’, and hence individuals need to pay tax for that amount in the year in which the transfer of the capital asset takes place. This is called capital gains tax. The two types of Capital Gains are short-term capital gains tax (STCG) and long-term capital gains tax (LTCG).

On custom duty front, the custom duties on articles of precious metals such as gold, silver and platinum has been increased from 20 percent to 25 percent in Budget 2023. The  Agriculture and Infrastructure Cess (AIDC), which was previously nil, has remained unchanged. The social welfare surcharge (SWS) has been removed in the current revision. The increase will come in effect from February 2, 2023.

Experts say that this will lead to a rise in the final price of locally made jewelry and maybe challenging for the local refineries.