How is buying and selling of gold taxed in India? Check short and long term capital gains tax rules on gold assets & more related News Here

How is gold taxed? (AI image)

Gold is a safe haven asset globally – and it is also the traditional savings and investment bet in India. Gold prices have been rising unexpectedly over the past 18 months and investors are rushing to buy the yellow metal amid global economic and geopolitical uncertainty.Investing in gold can happen in a variety of ways: physical pure gold such as coins or bars, gold jewellery, or even through digital forms and investment methods such as exchange traded funds (ETFs), mutual funds and sovereign gold bonds.While buying gold is seen as an obvious choice, especially in India with its cultural aspects, it is important to understand that your gold is taxed at the time of sale or purchase – and this also includes the jewelery you inherit!If you intend to buy or sell gold – whether in physical form, digitally, or through other investment mediums – it is important to understand the tax implications applicable to each category.

tax on sale of gold

The rules for short-term and long-term capital gains on sale of gold were revised after July 23, 2024. Additionally, under Section 54F of the Income Tax Act, long-term capital gains arising from the sale of gold can be exempted from tax if the entire sale consideration is invested in the purchase of residential property within the specified timeframe.Physical Gold, Gold Jewelery and Digital Gold: If you hold any of these gold-related assets for more than 24 months, the profit you make is treated as long-term capital gains – hence facing tax at 12.5% ​​without indexation. If you sell these gold assets within two years of acquiring them, the gain is classified as short-term and is taxed as per your applicable income tax slab.gold etf: : If ETF units are held for more than 12 months, long-term capital gains are applicable, which is taxed at 12.5% ​​without indexation. According to an ET report, if you sell them within 12 months, the gains are considered short-term and added to the total income, which is taxed as per the slab rates.Gold Mutual Fund: If your holding period is more than 24 months and is taxed at the rate of 12.5% ​​without indexation, the benefits you get from gold MF are considered long-term. However, if redemption is made before completing the 2 year deadline, it is treated as short-term gain and taxed at the applicable slab rates.Sovereign Gold Bond: Before Budget 2026, redemption of SGBs was tax-free if the bonds were raised during primary issuance or from the secondary market and redeemed with the Reserve Bank of India on or before maturity. However, as per the rules amended post-Budget, only sovereign gold bonds that are purchased upon primary issuance and held continuously till maturity remain exempt from taxes. Sovereign gold bonds bought or sold in the secondary market or sold before maturity will now be taxed as short-term or long-term capital gains depending on the holding period.Inherited Gold: It is important to understand that although inheritance is not taxed in India, capital gains tax is applicable when you sell inherited gold. The acquisition cost and holding period are calculated from the date the original owner acquired the asset. If the total holding period exceeds 24 months, long-term capital gains tax of 12.5% ​​without indexation is applicable, while for shorter holding periods taxation at income tax slab rates is applicable.

tax on purchase of gold

Physical Gold, Gold Jewelery and Digital Gold: A Goods and Services Tax (GST) of 3% is levied on purchases in these categories. In case of gold jewellery, an additional 5% GST is levied on the making charges.Gold ETFs, Gold Mutual Funds and Sovereign Gold Bond (SGB): No GST is charged at the time of purchase for these investment options.Imported Gold: There is a 6% customs duty on gold brought into the country.Inherited Gold: Gold received through inheritance, whether in the form of jewelery or any other form, is not subject to inheritance tax.Gifted Gold: Gold received as gift from specified relatives is exempt from tax. However, if this gold has been gifted to you by non-relatives and its value exceeds Rs 50,000 in a financial year, it becomes taxable under the head “Income from other sources”.