The festive seasons, especially Diwali, are the time when several Indians buy gold, either as an investment or as a gift for their loved ones. This enthusiasm also extends to non-resident Indians (NRIs) who live away from home or those who come to visit after a long time.
Gold, considered a safe haven, offers attractive investment prospects, particularly in times of inflation and unforeseen market turmoil.
Notably, the price of this precious metal has recently seen a significant rise, reaching almost $2,020 per ounce on global markets in October. This surge can be attributed, in part, to geopolitical tensions in the Middle East. In India, gold trades at around Rs 60,921 per 10 grams.
NRIs have different choices to invest in Indian gold, either through a cultural method like physical holding of gold or through modern methods like E-Gold, gold mutual funds. gold, etc. NRIs cannot invest in gold through the SGB scheme once they obtain their NRI status. . But. If an NRI had invested in SGB before obtaining his NRI status, then he can hold the bond till its maturity date.
How can NRIs invest in gold in India?
“NRIs can invest in gold in India in various forms including physical gold, gold ETFs and gold mutual funds. However, there are certain restrictions on NRI investments in gold, mainly due to the Foreign Exchange Management Act (FEMA), 1999,” said Sandeep Bajaj, an advocate at the Supreme Court.
Under the terms of the Sovereign Gold Bond (SGB) scheme, only persons resident in India can invest in gold bonds as per FEMA 1999.
SGBs are designed to encourage domestic investment in gold and reduce demand for physical gold imports. Allowing NRIs to invest in SGBs could increase demand for gold and put pressure on the country’s foreign exchange reserves.
“NRIs have not been allowed to apply for SGB, however, people who have applied while residing in India are allowed to retain it till they mature,” said Shashank Agarwal, advocate, Delhi HC.
This means that while investing, the investor must be a resident of India. However, they can subsequently change their residency status and become a Non-Resident Indian (NRI). In such situations, the investor has the option to hold the sovereign gold bond until its prepayment or maturity.
The Sovereign Gold Bond Scheme also offers a nomination service, allowing an individual investor, who is originally a resident of India, to nominate an NRI as their nominee. Under this arrangement, if the original investor dies, the NRI nominee can have the security transferred into his name, provided that the golden bond investment is held until prepayment or maturity and that the redemption proceeds and the interest generated by the investment are not repatriated. in India.
Investing in other forms of gold
, NRIs can purchase all other forms of SGB without gold. They can buy gold ornaments of any jewelry brand from stores or online. They can also buy gold coins and bars.
However, as an NRI investor, you are subject to tax on the return on the sale of gold units. Additionally, if the value of your gold units exceeds Rs 30 lakh in a given financial year, you are liable to pay wealth tax on the accumulated wealth.
Also, to invest in digital gold, whether it is Gold funds, Gold ETFs or E-gold, you need a Demat account. A Demat account is a depository account that holds your securities and shares in electronic form.
E-gold units, introduced in 2010 by the National Stock Exchange (NSE), are units of gold that are listed and can be traded on stock exchanges. The value of one E-gold unit is equivalent to the value of 1 gram of gold.
How much gold can NRIs bring back to India?
“A person who is residing abroad for more than one year is allowed to bring gold, duty free, in his/her bona fide baggage, up to 20 grams with a value limit of Rs.50 000/- (in case of a gentleman passenger) or up to 40 grams. grams with a value limit of Rs.1,00,000/- (in case of female passenger),” said advocate Sandeep Bajaj.
Gold exceeding these limits will be subject to customs duties.
Taxation and gold
If NRI buys and sells gold ETFs directly through stock exchanges, no TDS will be deducted, but if gold ETFs are traded through mutual fund companies, TDS will be applicable.