E-gold taxation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2011 Please let me know detailed aspect of taxation of E-gold transactions in stock market. its total widespread affects on taxation and income accruals.

CA. RENZ .V. RAJAN

CA. RENZ .V. RAJAN (Expert)
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20 November 2011 For an investor applicability of tax on the gain made is equally important as is the return.
Return in E Gold has surpassed all other asset class in the year 2010.
Investors seeking to beat the market looked towards E- series products due to ease of
buying and selling, along with their low transaction costs that offered investors the special instrument for portfolio diversification and better return. Investors need to understand the
tax consequences of E series products, so they can be proactive with their strategies. After all, this factor will determine the actual profits they have made.
The first step in understanding the taxation process is to know where and how it is applicable. Broadly four different taxes are applicable while transacting in the E Gold. These are Stamp duty, service tax, VAT and capital gains tax. The first three is transaction related while the capital gains tax is related with return. Implications of tax under various heads are given in the below table. Knowledge of applicability of capital gains tax is importance as it impacts substantially on the return.

Taxation Implications of E gold:

Category :E-Gold

Stamp Duty : Rs 1/- per Rs 1 Lakh of transaction

Service tax : 10.30% on the brokerage charged by the broker

Vat Tax : 1% on the transaction value of E-Gold units in the case of deliver

Short Term Capital Gain Tax : As per income tax slabs If E-Gold unit is sold within 36 months

Long Term Capital Gain Tax : taxed @ 20% If
E-Gold unit is sold after 36 months