Gold taxation explained: Physical vs ETF vs SGB vs inherited gold
Feb 16, 2026
Synopsis
If you are confused by personal finance terms, jargon and calculations, here’s a series to simplify and deconstruct these for you. In the 90th part of this series, Riju Mehta talks about the tax incurred on the purchase and sale of different types of gold.
If you are planning to purchase or sell gold, whether in physical, digital or any other form, here’s a rundown of the tax you’ll have to pay in each case.
PURCHASE OF GOLD
Physical gold, jewellery, digital gold: You will incur a 3% goods and services tax (GST) for all these options, while 5% GST is applicable on making charges if you buy gold jewellery.
Gold exchange-traded funds (ETFs), gold mutual funds, sovereign gold bonds (SGBs): No GST is levied on purchase of these forms of gold.
Imported gold: On importing gold, a 6% custom duty is levied.
Inherited gold: No inheritance tax is applicable if you are willed gold jewellery or gold in any other form.
Gifted gold: No tax is levied for gold gifted by specified relatives. However, in case of gold gifted by non-relatives, it is taxable under ‘income from other sources’ if the value exceeds Rs 50,000 in a year.
SALE OF GOLD
After 23 July 2024, the holding period for calculating short- and long-term capital gains for gold has changed. Also, under Section 54F of the Income Tax Act, longterm capital gains (LTCG) on sale of gold are tax-exempt if the entire sale proceeds are used to buy a residential property within the prescribed time periods.
Physical gold, jewellery, digital gold: LTCG tax will be applicable at 12.5% without indexation if held for over 24 months, while short-term capital gains (STCG) tax will be applicable at slab rates if held for less than two years.
Gold ETF: LTCG on ETFs held for over 12 months will be taxed at 12.5% without indexation, while STCG on holdings of less than 12 months will be added to the income and taxed at slab rates.
Gold mutual funds: LTCG will be considered if mutual funds are redeemed after a holding period of over 24 months and will be taxed at 12.5% without indexation. STCG will be taxed at slab rates if redeemed before 24 months.
Sovereign gold bonds: Before Budget 2026, SGB redemptions were tax-exempt if these were bought at primary issuance or in the secondary market and redeemed at or before maturity with the Reserve Bank of India. Now, only the bonds bought at primary issuance and held continuously till maturity are tax-exempt. If bought or sold in the secondary market or sold before maturity, these are taxed as STCG or LTCG based on the holding period.
Inherited gold: While no inheritance tax is applicable in India, you’ll have to pay capital gains tax on selling gold, depending on the holding period. The cost of acquisition and holding period will be considered from the time that the original owner purchased it. If the holding period is over 24 months, you’ll have to pay 12.5% tax without indexation on LTCG and at income slab rate for STCG.
[The Economic Times]
