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Capital Gains

Sonia Verma (state govt employee) (347 Points)

06 January 2010

Pls clarify:

1. Can deduction under 80C be availed by investing in Gold Deposit Bonds / Gold exchange-traded Mutual Funds?

2. Will selling of Gold Deposit Bonds / Gold exchange-traded Mutual Funds attract Capital Gains??

Thx.

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8 Replies

Amir (Learner) (4016 Points)
Replied 06 January 2010

Dear Sonia,

1) I think Investment in Gold Deposit bonds or such Mutual Funds IS NOT ELIGIBLE u/s 80 C

2) SALE OF SUCH BONDS/ MUTUAL FUNDS WILL ATTRACT CAPITAL GAINS EXCEPT GOLD DEPOSIT BONDS ISSUED UNDER FOLLOWING SCHEMES

A) 6½ per cent Gold Bonds, 1977,⁴⁹[or 7 per cent Gold Bonds, 1980,] ⁵⁰[or National Defence Gold Bonds, 1980,] issued by the Central Government ;]

B) Special Bearer Bonds, 1991, issued by the Central Government ;]

C) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government ;]

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CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 06 January 2010

1 ) Hi sonia, there is no deduction available u's 80 C for such investment, 80 C allows :

Investment in pension Plans
Investment in Equity Linked Savings schemes (ELSS) of mutual funds
Investment in specified government infrastructure bonds
Investment in National Savings Cerificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit)...

2) Moreover, for ur second Q, i think yes the gold bonds are generally taxed (as list stated by amir)... But i think the second option, i.e GOLD EXCHANGE-TRADE MUTUAL FUNDS, are definately taxed...

kumarsatish022 (Professional) (165 Points)
Replied 06 January 2010

Well Dear the best way to know whether particular investment is eligible for 80C is to refer SID( Information document) i dont think eligible for 80C

machender (student) (190 Points)
Replied 06 January 2010

Dear sonia varma,

1) as per section 80 c clause xiii investment in mututal funds is covered. so, deduction may be allowed.

2) gains arising from transfer of mutual funds is exempt u/s 10 (35)

plz read along with section 10 23D

Hareesh H Sharma (Cleared IPCC..now article) (894 Points)
Replied 06 January 2010

Dear Machender,

Does'nt 10(35) deal with income from mutual fund..its 10(38) which deals with capital gains arising from equity mutual fund

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Nayan Joshi (CA) (27 Points)
Replied 06 January 2010

Ms. Sonia Varma,

In my view,

(1) Deduction under Sec 80C would not be available since there is no lock in period of 3 years in case of MF except ELSS linked MF.

(2) In respect of Capital Gain, If you sale before 1 year from the date of purchse ,short term capital gain tax will attract. LTCG [holding more than 1 year] is exempt for MF/Bond.

sriram (CA) (281 Points)
Replied 07 January 2010

I tnk special gold bonds issued by govt is not taxable as CG

nicky (Ca student) (112 Points)
Replied 07 January 2010

yes,, its true...... Investment in Gold Deposit bonds or such Mutual Funds IS NOT ELIGIBLE u/s 80 C and SALE OF SUCH BONDS/ MUTUAL FUNDS WILL NOT ATTRACT TO CAPITAL GAIN TAX........