Gold Taxation in India: Rates on Every Route (2026)

Gold has been the standout asset of the last two years, and the taxman takes a different cut of every route to it. Jewellery, coins, digital gold, Gold ETFs, gold funds and Sovereign Gold Bonds all track the same metal, but their holding periods, GST treatment and exit taxes differ — and the July 2024 capital-gains rewrite plus a 2026 amendment to the SGB exemption have quietly made a lot of older advice wrong. Here is every route and every current rate, traced to official sources, as the law stands on 3 November 2026.

The whole post in one table

Where the 12.5% rate comes from

Long-term capital gains on gold are taxed under Section 112 of the Income-tax Act, and the July 2024 Budget rewrote it. The official section text, as substituted by the Finance (No. 2) Act, 2024 with effect from 23 July 2024, now reads:

at the rate of twelve and one-half per cent for any transfer which takes place on or after the 23rd day of July, 2024

That 12.5% is flat and comes with no indexation. Transfers before 23 July 2024 were taxed at 20% with indexation under the old regime (Source: Section 112, Income-tax Act, verified verbatim on incometaxindia.gov.in, 3 November 2026; the same 12.5% continues as Section 197 of the Income-tax Act, 2025 for the current year).

What counts as long-term also changed. The CBDT's FAQ on the new regime keeps just two holding periods — listed securities turn long-term after 12 months, every other asset after 24, with gold specifically falling from 36 to 24 months (Source: CBDT FAQs on the new capital-gains regime, PIB, 24 July 2024).

One grandfathering point people get wrong: the option to compute gains the old way — 20% with indexation, whichever is lower — survives only for land or buildings acquired before 23 July 2024. The proviso in Section 112 says land or building or both. Gold bought before that date and sold after it gets 12.5% without indexation, full stop (Source: proviso to Section 112(1)(a), incometaxindia.gov.in, verified 3 November 2026).

Physical gold and jewellery

Sell jewellery, coins or bars within 24 months of buying and the gain is added to your income and taxed at your slab rate. Cross 24 months and it becomes long-term at 12.5% (Source: Section 112 read with the two-year holding period, CBDT FAQ, 24 July 2024).

A worked example: you bought 20 grams of jewellery in 2021 for about ₹1,00,000 and sell it in 2026 for ₹2,90,000 — in line with the metal's actual price path, since RBI's June 2026 redemption window cleared at ₹14,774 per gram (Source: RBI redemption price as reported in our Sovereign Gold Bond guide, June 2026). The ₹1,90,000 gain is taxed at 12.5% — ₹23,750 before cess. Sold at 18 months instead, the whole gain would have been slab-rate income: ₹57,000 for a 30%-bracket filer, more than double (rates as sourced above).

Your cost basis is the invoice, which is why buying-time taxes matter twice: every rupee of GST and making charge inflates the invoice you later deduct, while the buyback you receive is typically below the day's rate and only against the original bill. Our physical gold buying guide covers the pricing mechanics; this page sticks to tax.

Digital gold: same tax as the metal in your locker

Digital gold on apps is a vendor contract backed by vaulted metal — not a security — so it is taxed exactly like physical gold: gains within 24 months at your slab rate, after 24 months at 12.5% without indexation (Source: CBDT FAQ holding-period table, 24 July 2024; consistent with our gold comparison post).

The twists are on the buying side: 3% GST just like the metal, plus a platform spread — roughly 2-3% over spot on the way in and a similar haircut on the way out — which is a cost, not a tax, so it gives you nothing extra to deduct. Fine for small amounts; expensive as a habit (Source: spread and GST figures as set out in our gold comparison post, 2 November 2026).

Gold ETFs and gold mutual funds

Gold ETF units are listed securities, so they turn long-term after just 12 months — taxed at 12.5% without indexation. Gold funds of funds are not listed, so they need 24 months for the same rate. That is the decisive difference between the wrappers (Source: Finance (No. 2) Act, 2024; CBDT FAQ, 24 July 2024 — laid out fully in our Gold ETF vs gold mutual fund post).

The short-term side surprises people: Gold ETF units sold within 12 months are taxed at your slab rate, not at 20%. The 20% short-term rate under Section 111A applies to STT-paid listed equity, equity-oriented mutual funds and business-trust units — gold ETFs are none of those (Source: CBDT FAQ Q6, PIB, 24 July 2024; Zerodha Fund House's gold ETF taxation guide states the same). That 20% headline belongs to equity funds, not gold.

Where the fund-tax mechanics — FIFO lots for SIPs, the ₹1.25 lakh equity exemption gold funds never get — come from, our mutual fund taxation guide handles them in depth. Gold FoF units follow those mechanics with a 24-month clock.

Sovereign Gold Bonds: interest taxed, exemption narrowed

SGB mechanics, briefly: 2.50% coupon paid half-yearly (2.75% on the earliest 2015-16 tranches), 8-year tenor, exit windows from year 5 on coupon dates, a 4 kg per-person annual cap, and no fresh issuance since February 2024 (Source: RBI SGB FAQ, questions 10, 14 and 24; tranche history as set out in our Sovereign Gold Bond guide).

The interest is always taxable at your slab rate, and no TDS is deducted on the bond (Source: RBI Sovereign Gold Bond FAQ, questions 28-29). The capital-gains side is where 2026 changed things. Until 31 March 2026 the exemption rode on Section 47(viic) of the 1961 Act: any redemption by an individual was not a transfer, so no gain arose however the bond was acquired. The Income-tax Act, 2025 carried it forward as Section 70(1)(x) — and the Finance Act, 2026 substituted that clause with effect from 1 April 2026. The official consolidated Act text now reads:

by way of redemption, of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015 or any subsequent Sovereign Gold Bond Scheme, if held by an individual from the date of original issue till maturity

(Source: Section 70(1)(x), Income-tax Act, 2025 as substituted by the Finance Act, 2026, incometaxindia.gov.in consolidated text, fetched 3 November 2026.)

Three conditions now apply together: the holder must be an individual, must have subscribed at the original issue, and must hold till maturity. Fail any one and the gain is ordinary capital gains. In practice:

• Original subscriber who rode out all 8 years: redemption gain is not a transfer — nothing to declare.
• Bought on the exchange, even if held to maturity: the redemption is now a taxable capital gain.
• Redemption in the year-5 exit windows: the clause requires holding till maturity, so early-window redemptions fall outside the exemption and are generally treated as taxable gains — a reading practitioners converge on, though no official FAQ addresses it directly.

For any taxable SGB gain, the bond is a listed security: long-term after 12 months at 12.5% without indexation, short-term at slab (Source: Section 197, Income-tax Act, 2025; CBDT FAQ holding periods). The tax reason to hunt a discount SGB on the exchange has therefore gone — compare price plus remaining coupons against a Gold ETF, as our SGB status page suggests. One grey area: the amendment is silent on bonds received by inheritance or family transfer, so do not assume either way without professional advice.

GST and customs: what you pay on the way in

Buying gold carries taxes that never appear on a capital-gains statement but shrink the returns all the same.

• 3% GST on gold itself — bullion, coins, jewellery — unchanged by the September 2025 GST 2.0 rationalisation: the 56th GST Council kept the gold rate untouched (Source: Shriram Finance and Razorpay GST-on-gold pages, both updated after September 2025, cross-checked against the GST Council's official 56th-Council FAQ of 3 September 2025, which lists no gold change).
• Ready-made jewellery is one composite supply: 3% applies to the total invoice value whether or not making charges are shown separately (Source: GST Council sectoral FAQ on gems and jewellery, gstcouncil.gov.in).
• Separately-billed making charges attract 5%, as before the 2025 changes — the rumoured 18% did not happen for gold making charges (Source: Razorpay and Shriram Finance GST guides, post-September 2025, cross-checked as on 3 November 2026).
• 6% customs duty sits inside every rupee gold price — 5% basic customs duty plus 1% AIDC since the July 2024 Budget (Source: Notification 82/2024-Customs dated 23 July 2024, as cited in our Gold ETF comparison; the CBIC pages were not fetchable at either verification, with the split cross-checked via Reuters and World Gold Council analysis).

No GST applies to Gold ETF units, gold fund units, or an SGB subscription. The fund pays GST on its gold once, inside the NAV; every physical or digital purchase pays it again at retail.

TDS and the cash ceiling

Sell gold and the buyer deducts no TDS from your proceeds. The 1% TDS you may have read about is Section 194S, and it applies to virtual digital assets — crypto — not gold (Source: Income Tax Department, Section 194S — payment on transfer of virtual digital asset, incometaxindia.gov.in). SGB interest and redemption also carry no TDS (Source: RBI SGB FAQ, question 29). No TDS does not mean no tax — the gain still goes in your return.

The cash rule bites harder. Section 269ST bars receiving ₹2 lakh or more in cash for a single transaction, in a day, or for one event from one person — with a penalty equal to the amount received. A jeweller cannot legally accept ₹2 lakh in cash, and a heavy chain sold for cash hits the same wall (Source: Section 269ST, Income-tax Act, as summarised by Tax2win and Bajaj Finserv, cross-checked as on 3 November 2026). Large gold transactions go through banking channels — that paper trail is also your cost proof later.

Reporting gold in your ITR

Gold gains are capital gains, and capital gains live in ITR-2's Schedule CG (Source: Income Tax Department, ITR-2 online filing manual — Schedule CG; consistent with our ITR filing guide). ITR-1 is only open to equity gains under Section 112A up to ₹1.25 lakh — any gold, digital gold, ETF or SGB gain puts you in ITR-2 territory.

Habits that save notices: report each lot from its invoice (the FIFO logic in our mutual fund taxation guide applies here too), claim no indexation on gold because the law no longer offers it, and set off losses correctly — short-term gold losses offset both short- and long-term gains, long-term losses only long-term. SGB interest goes under income from other sources every year, even with nothing deducted at source.

This is educational content, not tax advice; rates apply to transfers in FY 2026-27 under the law as it stands on 3 November 2026. Confirm your specific case with a chartered accountant.

Which route is kindest at exit

The hierarchy now: an original-subscription SGB held to maturity (untouchable), then Gold ETFs (12.5% after just 12 months, plus SEBI regulation and liquidity), then physical, digital gold and gold funds (same rate, 24-month wait, higher entry costs). Full economics — costs, liquidity, regulation, not just tax — are in our gold comparison and how to invest in gold guides.