New Provisions

Conversion of gold to Electronic Gold Receipts (EGR) and vice versa

Pursuant to the announcement in Budget 2022, SEBI came out with a detailed framework for spot trading in gold on existing stock exchanges through EGR.

• Capital gains exemption: In order to promote the concept of electronic gold, it has been proposed to provide exemption from capital gains tax on conversion of physical gold into EGR (issued by a SEBI registered vault manager) - [Section 47(viid)]

• Cost of Acquisition (COA): Further, it has also been proposed to provide that the COA of EGR for the purpose of computing capital gains shall be deemed to the cost of gold in the hands of person in whose name EGR is issued - [Section 49(10)]

• Period of Holding (POH): It has also been proposed to provide that POH shall include the period for which gold was held by the assessee prior to its conversion into EGR - [Clause (hi) to Explanation 1 of Section 2(42A)]

Similar tax provisions and clarifications have been provided in case of conversion of EGR into gold