While financial products are gaining ground with investors, real estate and gold continue to hold strong.
In fact, to unlock the value from the physical gold that many Indians hold and to reduce gold import, the government launched the Sovereign Gold Bonds and Gold Monetisation Scheme in 2015.
The two physical asset classes of real estate and gold have for long been considered safe havens by Indian investors, and are usually a very large chunk of portfolios. But over the past few years, returns from them have been poor to negative.
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The government reduced the period after which a real estate holding is considered a long-term asset—from three years to two years in 2015. But given the current valuations in the metros apart from the one house for self-use, real estate investments don’t make economic sense.
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Given this, you need to rethink and downsize if you are overexposed to these assets. But in doing so you need to be mindful of the tax rules that will apply. Here is a look at the taxes that apply to short-term and long-term gains from these two asset classes.
