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Gold metal on lease to father properiotership firm

Bhartesh jain (Businesd) (32 Points)

15 June 2025

Hello everybody

Can i lease gold to my father jewellery firm and get interest on it. Is it allowed in income tax to lease gold instead of cash to private firm.

Thank in advance

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8621 Points)
Replied 16 June 2025

Leasing Gold to a Private Firm Leasing gold to your father's jewelry firm and earning interest on it is an unconventional arrangement.

Let's explore the income tax implications: Income Tax Treatment -

*Gold as a commodity*: Gold can be treated as a commodity for leasing purposes, but the income tax treatment might differ from traditional leasing arrangements. -

*Interest income*: If you lease gold to your father's firm and earn interest, the interest income might be taxable under the head "Income from Other Sources." Key Considerations -

*Documentation*: Ensure you have proper documentation for the gold leasing arrangement, including agreements, valuation reports, and interest payment records. -

*Valuation*: Determine the value of the gold being leased, as this will impact the interest calculation. -

*Interest rate*: Agree on a reasonable interest rate for the gold leasing arrangement. Tax Implications -

*Taxability*: The interest income earned from leasing gold might be taxable, and you'll need to report it in your income tax return. -

*TDS*: Depending on the arrangement, TDS might be applicable on the interest income. Private Firm's Perspective -

*Business expense*: The interest paid on the gold leasing arrangement might be considered a business expense for your father's firm. -

*Documentation*: Ensure the firm maintains proper records of the gold leasing arrangement and interest payments. Consultation -

*Tax professional*: Consult a tax professional to understand the specific tax implications and ensure compliance with income tax regulations. -

*Valuation expert*: Consider consulting a valuation expert to determine the value of the gold being leased.

By understanding the income tax implications and maintaining proper documentation, you can navigate the gold leasing arrangement effectively.

Bhartesh jain (Businesd) (32 Points)
Replied 16 June 2025

Thank you sir for your valuable advice . I am glad for your response 🙏 My main purpose for giving gold instead of cash is i want to invest in gold and can give it on lease .i am ready to pay any income tax arising on the interest income . Whenever in future after 3 years when i will sell gold i will incur ltgc tax which is 12.5 percent.

Regards

Bhartesh jain

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