Non-resident Indians (NRIs) who want to invest in gold in India have various options, including physical gold, gold ETFs, and gold mutual funds. However, they cannot invest in Sovereign Gold Bonds (SGBs), which are issued by the Reserve Bank of India (RBI) on behalf of the government.
Physical gold can be purchased from any jewellery store or online platform in the form of ornaments, coins, or bars. Gold ETFs and gold mutual funds are financial instruments that track the price of gold and can be bought and sold through a Demat account on the stock exchange or through a mutual fund house.
What are the restrictions and tax implications for NRIs investing in gold in India?
NRIs investing in gold in India are subject to certain restrictions and tax implications, mainly due to the Foreign Exchange Management Act (FEMA), 1999. According to FEMA, NRIs cannot invest in SGBs, which are designed to encourage domestic investment in gold and reduce the demand for physical gold imports.
SGBs offer interest income and capital appreciation linked to the market price of gold. They also have a nomination facility, which allows an NRI to be designated as a nominee by an Indian resident investor. However, NRIs cannot apply for SGBs directly, and they can only hold them till maturity or early redemption if they had invested in them before becoming NRIs.
NRIs are also liable to pay taxes on the returns from the sale of gold units in India. They have to pay short-term capital gains tax if they sell the gold within three years of purchase, and long-term capital gains tax if they sell it after three years. Additionally, if the value of their gold units exceeds Rs 30 lakh in a given financial year, they have to pay wealth tax on the accumulated wealth.
What are the rules for NRIs to bring gold in and out of India?
NRIs can bring gold in and out of India, subject to certain rules and regulations. According to the Customs Act, 1962, NRIs are allowed to bring gold, free of duty, in their bonafide baggage up to 20 grams with a value cap of Rs 50,000 (in case of a male passenger) or up to 40 grams with a value cap of Rs 1,00,000 (in case of a female passenger).
Gold exceeding these limits will incur customs duty at the prevailing rates. NRIs also have to declare the gold they are carrying to the customs authorities and obtain a receipt for the same.
As for taking the gold out of India, there are no restrictions per se, but the destination of the gold will determine the amount of gold that one can carry out of India. NRIs have to check the import rules of the country they are travelling to and comply with them accordingly. They also have to obtain a certificate of export from the customs authorities in India, which will prove the source and ownership of the gold.