Income Tax relief: Invest in Gold ETFs to earn handsome returns
Gold is back again in the headlines with a relentless northward march of prices. The interesting point is you could think of investing in gold with the extra cash that you could save through the generous income tax reliefs that has been promised in the Budget 2025.
Kolkata: Union budget 2025 will go down in India's financial history as a landmark budget for income tax reliefs, when finance minister offered significant tax reliefs with the sole objective of boosting consumption and stepping up the GDP growth rate. Since GDP is substantially dependent of the fuel of private consumption, putting additional cash in the pockets of taxpayers is one of the surest ways of boosting growth.
Significantly, there is another route to save some money every month, thanks to the rate cut decision by Reserve Bank of India (RBI). Those who are already repaying loans can hope for lower EMIs and this is true for every type of loan -- home loan, auto loan and personal loan. All interest rates are linked to the Repo Rate which the RBI has reduced from 6.5% to 6.25%. An SBI Research paper has forecast that RBI will cut rates by another 50 basis points in 2025, which could result in quite significant savings by way lower EMIs.
Income tax slabs and savings from April
A large number of people whose pay are up to Rs 25 lakh a year stand to gain significantly simply by way of lower income taxes -- in other words, without cutting corners, or making extra efforts to save. According to consultancy major EY India, the additional cash in the hands of the taxpayer can be quantified in the following manner:
Taxable income Rs 12.75 lakh: Savings Rs 83,200Income Rs 15 lakh: Rs 32,500Income Rs 16 lakh: Rs 40,300Income Rs 20 lakh: Rs 85,800Income Rs 25 lakh: Rs 114,400
It is apparent from this table that the savings are significant. If one has been paying EMIs, then some amount should also be added against that head. Together, the two would lead to quite a tidy amount in the pocket of the taxpayer.
Invest in gold
It is clear that one can invest in gold profitably. As an investment instrument, gold has an everlasting appeal to retail as well as institutional investors. Most important, one can invest in gold in other ways than buying the metal (coins, bars and/or jewellery). One can invest in gold ETF or gold mutual funds, both of which closely track the price of metallic gold. The advantage of investing in gold ETFs (over physical gold) are many -- one does not need to safekeep it. ETFs are dematerialised form of investing in gold (like mutual funds) and therefore, even storage spaces like bank vaults are not needed. The returns are quite significant too. For example, according to reports, some of the prominent gold ETFs and their returns in 2024 were HDFC Gold ETF (return 20.30%), Invesco India Gold ETF (20.29%), LIC MF Gold ETF (20.25%), Mirae Asset Gold ETF (20.08%) etc. Many prominent AMCs offer gold ETFs. An important point to note is that one needs a demat account to invest in ETFs.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds and crypto assets.)