Tax on gold and silver

Part of Tax on investments. 6 min read. Free lesson with a short video, quiz and practice.

Indians hold gold in many forms: jewellery, coins and bars, gold ETFs, gold mutual funds and Sovereign Gold Bonds (SGBs). Each form is taxed a little differently. Silver works the same way as gold.

Physical gold: jewellery, coins, bars

• Held more than 24 months: long-term gain, taxed at 12.5% without indexation.
• Held 24 months or less: the gain is added to your income and taxed at your slab rate.
• When buying, you pay 3% GST on the gold's value, and jewellery adds 5% GST on making charges. Making charges are usually not recovered when you sell, so they eat into your return.

Gold ETFs and gold mutual funds

• Gold ETFs trade on the stock exchange. Units bought from 1 April 2025 are long-term after 12 months and taxed at 12.5%; earlier they go to your slab rate.
• Gold mutual funds (which usually invest in gold ETFs) are long-term after 24 months, taxed at 12.5%; earlier, at your slab rate.
• Units bought between April 2023 and March 2025 can follow different rules, so check your capital gains statement.

Sovereign Gold Bonds

• SGBs pay 2.5% interest a year on the issue amount. This interest is taxed at your slab rate.
• At maturity (8 years), the gain is tax-free for individuals. From 1 April 2026, this exemption applies only if you bought the bond at its original issue and held it to maturity. Bonds bought on the stock exchange later do not get it.
• Selling SGBs on the exchange before maturity: long-term after 12 months, taxed at 12.5%.
• The government has not issued new SGBs since February 2024.

Digital gold sold by apps is taxed like physical gold. It is not regulated by SEBI or the RBI.

A worked example

Lata bought gold coins for ₹2,00,000 in 2021 and sells them for ₹3,20,000 in 2026. She held them for more than 24 months, so the ₹1,20,000 gain is long-term. Tax: 12.5% × ₹1,20,000 = ₹15,000, plus cess = ₹15,600.

Had she sold within 24 months and been in the 30% slab, the tax would have been ₹36,000 plus cess.

Gifted or inherited gold

Gold received from relatives or inherited is not taxed when received. When you sell, the original owner's cost and holding period are used. Keep purchase bills where you can.