How gold is taxed in India: jewellery, digital gold, gold funds and SGBs

Gold is taxed in India when you sell it at a profit, and the rate depends on how long you held it. This is the rule under the Income-tax Act, 2025, for tax year 2026-27. Gold exchange-traded fund (ETF) units held more than 12 months are taxed at 12.5% on the gain, and so is other gold held more than 24 months. Shorter holdings are taxed at your slab rate.

A capital gain is the profit on selling an asset. The holding period is how long you owned it, from the day you bought to the day you sold. It decides whether the gain is short-term or long-term. Your slab rate is the tax rate for the income band your total income sits in. A 4% cess, an extra charge on the tax itself, is added to every income-tax figure below.

How is gold taxed in India?

Each form of gold has its own holding-period line, but the long-term rate is 12.5% for every form sold at a long-term gain, with no indexation. A Sovereign Gold Bond (SGB) is a government security counted in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India. It pays 2.5% interest a year, and it has an extra tax rule.

The table is for a resident individual who is not a dealer, under the Income-tax Act, 2025, for tax year 2026-27, plus 4% cess. The SGB maturity rule dates from 1 April 2026.

How are gold jewellery and coins taxed when you sell?

Gold jewellery, coins and bars are capital assets, which the Act defines as property of any kind held by a person. Even jewellery you wear counts, because the Act excludes jewellery from "personal effects".

Sell after more than 24 months and the gain is taxed at 12.5% under section 197 (the old Section 112), with no indexation. Sell after 24 months or less and the gain is added to your income and taxed at your slab rate.

Before 23 July 2024, gold was long-term only after more than 36 months. The long-term rate was 20%, with indexation, which raised your purchase cost in line with inflation before the gain was worked out, and so cut the taxable gain.

Take coins bought as savings.

• Coins bought for ₹3,00,000 and sold for ₹3,90,000 after more than 24 months. The gain is ₹90,000.
• Tax at 12.5% is ₹11,250. Cess at 4% adds ₹450. The total is ₹11,700.
• The same sale after 24 months or less, by someone under 60 whose income is already inside the 30% band before the gain is added and stays inside it after, is taxed at 30%. That is ₹27,000, plus ₹1,080 cess, so ₹28,080.

Both totals assume total income of ₹50 lakh or less, so no surcharge applies. Surcharge is an extra charge on the tax itself once total income passes ₹50 lakh. The totals ignore any expenses of the sale. They also ignore any unused tax-free limit: for a resident individual whose other income is below it (₹4,00,000 in the new regime), the shortfall comes off the long-term gain first.

Swapping old jewellery for new at a jeweller counts as a sale for tax, because the Act treats an exchange of a capital asset as a transfer. Each purchase also has its own date, shown on its invoice, and its own 24-month clock.

The rebate in the new regime cuts the tax itself by up to ₹60,000 when total income is ₹12 lakh or less. It cancels only tax worked out at the normal slab rates. It does not cancel the 12.5% tax on a long-term gain. Short-term gold gains, taxed at your slab rate, are covered by the rebate like your salary. All your gains, long-term ones too, count towards the ₹12 lakh limit.

How are gold ETFs and gold mutual funds taxed?

Gold ETF units held more than 12 months, and gold fund of funds units held more than 24 months, are taxed at 12.5% on the gain. A gold ETF has units that trade on a stock exchange. A gold fund of funds invests in another gold fund and is not listed.

Shorter holdings are taxed at your slab rate. For gold and silver ETFs and funds of funds, the purchase date does not matter in the 2026-27 tax year.

A resident's gains on selling these units carry no TDS, which is tax deducted before the money reaches you.

If you invest through a SIP, each instalment has its own holding period. When you sell part of the holding, the units from your earliest instalments are sold first. See the gold SIP guide, how SIP returns are taxed and tax on mutual fund redemption.

Koshex, an app run by an AMFI-registered mutual fund distributor (Koshex holds ARN-154632), offers gold funds and silver funds as regular plans.

How is digital gold taxed?

Digital gold is a capital asset, so a gain is long-term only after more than 24 months, taxed at 12.5% under section 197 (the old Section 112), and short-term at your slab rate before that. This holds only if the product gives the buyer ownership of gold. Digital gold is not regulated by SEBI. In November 2025 SEBI said such products are "neither notified as securities nor regulated as commodity derivatives" and that its investor-protection mechanisms do not apply to them. Gold ETFs and gold mutual funds are SEBI-regulated. The full rules, with a worked example, are in how to save tax on digital gold. Koshex offers digital gold from ₹100, through SafeGold (24K, 99.5% purity) and MMTC-PAMP.

How is a Sovereign Gold Bond taxed?

The 2.5% interest on a Sovereign Gold Bond is taxed at your slab rate every year. No tax is deducted from it, so you have to show it in your return yourself.

The gain at maturity is tax-free under section 70(1)(x) of the Income-tax Act, 2025 (the old Section 47(viic)), but from 1 April 2026 only if you bought the bond when it was first issued and held it until maturity. The Finance Act, 2026 changed the wording. The exemption now covers a bond "held by an individual from the date of original issue till maturity". The Memorandum explaining the change says it applies to tax year 2026-27 and later years.

Bonds bought on the stock exchange do not get this.

If you sell on the exchange instead, the gain is taxed. It is 12.5% if you held the bond for more than 12 months, or your slab rate if you held it for 12 months or less.

The last Sovereign Gold Bond issue was in February 2024, and RBI has announced no new issue since. Ways to invest in gold covers the options.

Is gold you receive as a gift or inheritance taxed?

Gold you inherit, or receive from a close relative or on your wedding, is not taxed when you receive it. Gold jewellery or bars from anyone else are taxed as your income once the year's gifts from non-relatives are worth more than ₹50,000 in total. The whole value is taxed then, not only the part above ₹50,000.

The Act's list of relatives is wide:

• your spouse
• your brothers and sisters
• your spouse's brothers and sisters
• brothers and sisters of either of your parents
• your parents, grandparents and further back, and your children, grandchildren and further down
• the same ascendants and descendants of your spouse
• the spouse of anyone in this list other than your own spouse

When a gift is taxed, the value of jewellery is its fair market value, the price it would fetch if sold in the open market. If the jewellery came by purchase from a registered dealer, its invoice value is used.

If the gift was taxed, the value taxed becomes your cost when you sell later.

When you sell inherited gold, or gifted gold that was not taxed when you received it, the gain is worked out from what the original owner paid and the date they bought it. Their holding period counts as yours. A gift or a will, made by an individual, is not a sale, so the giver pays no capital gains tax for giving it away.

For gold bought before April 2001, you may use its value on 1 April 2001 as the cost instead. The Act gives no method for proving that value. For units, see gift mutual fund units.

Do you have to show gold in your income tax return?

You report a gain in the year you sell, in the capital gains section of your income tax return (ITR). If you have no business income and you sold gold at a gain, you will need ITR-2, not ITR-1. ITR-1 allows only long-term gains under section 198 up to ₹1,25,000, and gold gains are taxed under section 197 or at slab rates.

Interest from Sovereign Gold Bonds goes in your return under income from other sources, the part of the return for income such as interest and dividends, which is taxed at your slab rate. See income tax return (ITR) and the Income-tax Act, 2025.

A buyer whose business turnover is above ₹10 crore deducts TDS of 0.1% only on the part of a purchase above ₹50 lakh.

Can you save tax on a gold gain?

Section 86 of the Income-tax Act, 2025 (the old Section 54F) can cut the tax on a long-term gain from gold if you use the sale money to buy or build one house. Only a long-term gain qualifies, so the holding-period lines in the table above apply.

You must buy within one year before or two years after the sale, or build within three years. The tax saved is in proportion to how much of the sale money goes into the house. You cannot own more than one other house on the date of the sale. Money not yet spent by the return due date must sit in the capital gains account scheme. Sell the new house within three years and the tax comes back.

The bonds under section 85 (the old Section 54EC) are for gains on land or buildings only, so they are not open to gold gains. Deductions under section 123 (the old Section 80C), available in the old regime only, cannot be set against a long-term gold gain.

A loss on selling gold has to be set against your capital gains of the same year before anything else. Only the part left over is carried forward, for up to eight years, and only if you file your return on time. A long-term loss can be set only against long-term gains.