Income Tax on Gold in India: Everything You Need to Know

July 21, 2025

income-tax-on-gold-sale

Gold has long been regarded as a safe haven for investment, offering security and consistent returns over time. However, like any other investment, gold is subject to income tax regulations in India. Understanding these tax implications is essential for individuals looking to optimize their financial strategies.

 

Gold and Their Tax Implications: Important Factors to Remember

In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced significant changes to tax rates on capital gains:

  • Long-Term Capital Gains (LTCG): Tax rate increased to 12.5% from 10% and the tax exemption limit has been increased to ₹1.25 lakh.
  • Short-Term Capital Gains (STCG): Tax rate increased to 20% from 15%.
  • Tax Exemption Limit: Increased to ₹1.25 lakhs.

 

It’s important to note that any income generated from the sale of gold, whether in the form of jewellery, coins or bars is subject to taxation. If you’re buying gold jewellery, you have to pay GST (Goods and Services Tax) at 3%. This is over and above the jewellery making charges. There is no tax levied on buying gold jewellery.

 

However, if you’re exchanging old jewellery with a new one, it will be considered as selling of gold and the prevailing capital gains tax rules will be applicable. 

 

As mentioned above, if the old gold jewellery is sold after holding it for two years, LTCG tax of 12.5% will be applicable without any indexation benefit.

 

You may ask what is indexation benefit? In simple words, indexation benefit refers to the adjustment of the purchase price of an asset to account for inflation, reducing the taxable gains and consequently lowering the tax liability on long-term investments.

 

Now back to the point. If the old gold jewellery is sold before 2 years of holding, STCG will be taxed as per your income tax slab. 

 

Are There any Tax Exemptions?

You can claim an income tax exemption when you use the proceeds from the sale of gold to purchase a property. According to Section 54F, if the proceeds from the sale are invested in purchasing a property, the income tax exemption applies. When gold or other precious metals are sold to buy new assets, it qualifies as a new purchase, and tax is charged on the capital gain arising from the sale.

 

Example of Tax Calculation

If you sell gold purchased over two years ago and earn a capital gain of ₹50,000, your tax liability would be ₹6,250 (12.5% of ₹50,000). Additionally, a 4% cess of ₹250 applies, making the total tax liability ₹6,500.

 

These provisions came into effect on July 23, 2024, under the Finance Bill 2024.

Final Thoughts

Understanding the tax implications of gold investments can help you make informed financial decisions. With changes introduced in Budget 2024, it is advisable to plan your investments in gold accordingly to maximize returns and minimize tax liabilities.

 

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FAQs

1. What is the current LTCG tax rate on gold investments in India?

The LTCG tax rate on gold investments is 12.5%, as per Budget 2024.

2. How is digital gold taxed in India?

Digital gold is taxed the same as physical gold.

3. Are gifts of gold from relatives taxable?

No, gifts from relatives like parents, spouse, or children are tax-exempt under Section 56(2) of the Income Tax Act.

4. Is gold received during a wedding taxable?

Gold received as gifts during a wedding is tax-exempt unless sold, in which case capital gains tax applies.

5. Can NRIs invest in Sovereign Gold Bonds?

No, NRIs are not allowed to invest in Sovereign Gold Bonds as per RBI and FEMA regulations.

6. What is the tax treatment for gold derivatives?

Income from gold derivatives is treated as non-speculative business income, and expenses can be claimed against it.

7. Are Gold ETFs taxed differently for NRIs?

NRIs are subject to TDS on Gold ETF redemptions, with LTCG taxed at 20% and STCG taxed at slab rates.

8. What is the tax on paper gold held for less than 3 years?

Paper gold held for less than 3 years is taxed as per the investor’s income slab rate.

9. Can I claim expenses against income from gold derivatives?

Yes, expenses can be claimed by preparing a Profit & Loss account for income from gold derivatives.

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