Electronic Gold Receipts (EGRs) are instruments that represent gold in electronic form and are notified as securities with trading, clearing, and settlement features that are comparable to other securities already offered in India

Conversion of physical gold to electronic gold will not attract capital gains tax: Budget 2023

In order to encourage buying of electronic gold, the government announced that there would be no capital gains tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa. This announcement was made by Nirmala Sitharaman in the Union Budget 2023.

According to the Union Budget 2023, “it is proposed to exclude the conversion of physical form of gold into EGR and vice versa by a SEBI registered Vault Manager from the purview of ‘transfer’ for the purposes of Capital gains.”

“It is also proposed that the cost of acquisition of the EGR for the purpose of computing capital gains shall be deemed to be the cost of gold in the hands of the person in whose name Electronic Gold Receipt is issued, and the holding period for the purpose of capital gains, would include the period for which gold was held by the assessee prior to its conversion into EGR. Similarly, provision for conversion from gold to EGR is also proposed,” added further.

Note that these amendments will take effect from the 1st day of April, 2024 and will accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years.

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What are Electronic Gold Receipts?
According to Bombay Stock Exchange website, “The Instruments representing gold in electronic form is termed as Electronic Gold Receipts (EGRs) and is notified as securities, with trading, clearing and settlement features similar to other securities that are currently available in India. "

Benefits Exchange Gold Receipts (EGR)
· Electronic, Effective and Transparent Platform for Bullion Trading
· Efficient Price Discovery and Standardization of Gold
· Assurance in the Quality of Gold
· Settlement Guarantee to the Investors
· Fungibility of the gold delivery

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This story originally appeared on: India Times - Author:Faqs of Insurances