Introduction
Tax on gold in India applies at two stages: a 3% GST when you buy it, and capital gains tax when you sell it at a profit. Simply owning or storing gold attracts no tax.
When you sell, the rate depends on how long you held it. Gains on gold held for 24 months or less are added to your income and taxed at your slab rate. Gains on gold held for more than 24 months are taxed at a flat 12.5% without indexation. Gold tax in India is a central subject, so the rules are the same nationwide: gold tax in Kerala, Maharashtra or any other state follows the same GST, customs and capital-gains framework.
What Are the Taxes on Gold in India?
Understanding gold tax in India comes down to three taxes, and each one lands at a different stage. GST applies when you buy. Import duty is built into the price of imported gold before it reaches you. Capital gains tax applies when you sell at a profit.
There is no annual tax, wealth tax or holding tax on gold you simply own. One point that catches many sellers: the Income Tax Act treats gold jewellery, coins and bars as a capital asset, and jewellery is specifically excluded from “personal effects.” Any profit on its sale is therefore taxable, unlike household items you sell.
How Much Is the Tax on Gold Purchase in India?
Buying is where most people first meet gold tax. Two GST components apply at the counter, and a third cost, import duty, sits inside the price you pay.
Tax on Gold Jewellery in India: GST and Making Charges
A flat 3% GST applies to the value of the gold across jewellery, coins, bars and digital gold. The rate is uniform nationwide and does not change with purity, so 18K, 22K and 24K are all taxed at 3% on value. A separate 5% GST applies to making charges on jewellery, and the same 5% covers repair charges.
Worked example: on jewellery with a gold value of ₹90,000 and making charges of ₹10,000, GST comes to ₹2,700 (3% of ₹90,000) plus ₹500 (5% of ₹10,000), for ₹3,200 in tax and a total bill of ₹1,03,200.
Two exemptions are worth knowing. Gold ETFs and Sovereign Gold Bonds carry no GST on the gold value, though an ETF's fund expenses attract 18% GST. When you exchange old gold for new jewellery, GST is charged only on the excess value, not on the weight of old gold you hand back.
How Gold Import Duty (15%) Affects the Price
India imports most of its gold, so customs duty is part of the domestic price structure. The effective import duty was raised to 15% on 13 May 2026, up from about 6%. It is made up of 10% Basic Customs Duty and a 5% Agriculture Infrastructure and Development Cess.
You will not see this duty as a line item at the jeweller. It is charged at the import stage and absorbed into the price before the gold reaches the shop. Import duty and GST are separate charges: duty raises the underlying cost of imported gold, while GST is added when the product is sold to you. As a rough guide, 15% duty followed by 3% GST on the duty-loaded value works out to about 18.5% before making charges.
Important: Import duty was raised from about 6% to 15% on 13 May 2026. Customs rates move by notification, so confirm the current CBIC figure before any large purchase.
What Is the Gold Tax Rate When Selling Gold?
Selling gold triggers capital gains tax when the sale value is higher than your acquisition cost. The gold tax rate on a sale depends entirely on how long you held it, and the tax rate on gold splits cleanly into two cases. An individual selling personal gold pays no GST on the sale; the jeweller who buys it handles that.
Short-Term Capital Gains (STCG)
Gold sold within 24 months of purchase is a short-term capital asset. The profit is added to your total income and taxed at your applicable slab rate. There is no indexation and no inflation adjustment. If you buy gold for ₹2,00,000 and sell it 18 months later for ₹2,50,000, the ₹50,000 gain is added to your income for the year.
Long-Term Capital Gains (LTCG)
Gold held for more than 24 months is a long-term capital asset. For transfers made on or after 23 July 2024, long-term gains on gold are taxed at a flat 12.5% without indexation, plus 4% cess and any applicable surcharge. The earlier rule of a three-year holding period and 20% tax with indexation no longer applies to current sales, a change many older guides still get wrong.
Worked example: gold bought in March 2022 for ₹2,00,000 and sold in September 2025 for ₹3,20,000 gives a gain of ₹1,20,000. LTCG at 12.5% is ₹15,000, and 4% cess adds ₹600, for total tax of ₹15,600.
Income Tax Act 2025: What Changed
The Income Tax Act 2025 is in force from 1 April 2026. It replaces the terms “Previous Year” and “Assessment Year” with “Tax Year,” and renumbers most sections. Capital gains rates on gold are unchanged. ITR forms for AY 2025–26 now require gains to be reported separately for transactions before and after 23 July 2024.
Pro Tip: If you are close to the 24-month mark, waiting to sell can move a gain from slab-rate STCG to the flat 12.5% LTCG.
How Does Tax on Gold Differ Across Physical, Digital, ETFs and SGBs?
Physical gold sets the baseline, but the same capital-gains logic plays out differently across paper forms. The holding period and GST treatment are where they diverge.
Physical and digital gold: both use the 24-month long-term threshold and the 12.5% rate. Digital gold carries 3% GST on purchase and is not regulated by SEBI or RBI, a point buyers should weigh.
Gold ETFs: listed on exchanges, so they turn long-term after just 12 months. There is no GST on the gold value, though fund expenses carry 18% GST.
Sovereign Gold Bonds: capital gains are fully tax-free if held to maturity (8 years). The 2.5% annual interest is taxable at your slab. Sold early on the exchange, they follow the 12-month LTCG rule.
How Much Gold Is Allowed in India?
There is no legal limit on how much gold you can own in India, provided you can explain the source: disclosed income, inheritance or documented gifts. The question of how much gold is allowed in India is really about seizure protection, not ownership.
Under CBDT guidance (the 11 May 1994 search-and-seizure circular), jewellery up to the following quantities is not seized during a search even if it does not match your tax records: 500g for a married woman, 250g for an unmarried woman, and 100g for a male family member. These are thresholds below which tax officers will not seize, not caps on what you may hold.
Holding more than these quantities is not illegal. If asked, you must show the gold came from a legitimate, documented source. Where the source of excess gold cannot be explained, it can be taxed as unexplained investment under Section 69B at the Section 115BBE rate: 60% tax plus a 25% surcharge and 4% cess, with a possible 10% penalty.
Documents and Valid Proof for Holding Gold
Good records make it simple to explain the source of your gold and to calculate tax when you sell. Keep the following:
Original purchase invoices showing value, weight, purity and tax
Bank, card or digital payment confirmations
Hallmark or assay details, and digital-gold purchase and sale statements
Gift deeds, wills, succession records or family-settlement documents
Valuation reports for older or inherited gold, and sale or exchange receipts
PAN or Form 60 is generally required for any purchase or sale above ₹2 lakh. A separate rule bars a seller from receiving ₹2 lakh or more in cash for a single transaction, and splitting one purchase into smaller cash payments does not get around it. Use a traceable payment method for high-value buys.
Is Gifted or Inherited Gold Taxable?
Gold received through inheritance is not taxed on receipt. Gold gifted by specified relatives, or received on your marriage, is also exempt. Gold gifted by a non-relative becomes taxable under “Income from other sources” at your slab rate if the total value of such gifts crosses ₹50,000 in a financial year.
Tax can still arise later. When gifted or inherited gold is sold, capital gains apply, and the previous owner's cost and holding period carry over to you. That often makes inherited gold a long-term asset in your hands. For gold the previous owner acquired before 1 April 2001, the cost is taken as the fair market value on that date or the actual cost, whichever is higher. Keep a gift deed or will to establish the source.
How Can You Reduce or Save Tax on Gold?
A few legitimate routes can lower the tax on a gold sale. None of them removes the need to keep clean records.
Time the holding period: crossing 24 months converts a slab-rate short-term gain into a 12.5% long-term gain.
Section 54F reinvestment: long-term gains are exempt if you reinvest the net sale proceeds in one residential house, bought one year before or two years after the sale, or built within three years. A partial reinvestment gives a proportionate exemption, and the exemption is clawed back if the new house is sold within three years.
Mind the wrong section: Section 54EC does not apply to gold, since it covers gains from immovable property. Relying on it is a common and costly error.
There is no income tax exemption on the gold purchase itself; the reliefs above apply to gains at the point of sale. For future buying, Sovereign Gold Bonds held to maturity remain the most tax-efficient way to hold gold.
Frequently Asked Questions
How much tax do you pay on gold in India?
You pay 3% GST when buying gold, plus 5% on making charges. When you sell, profit is taxed at your slab rate if held 24 months or less, or a flat 12.5% without indexation if held longer. There is no tax for simply owning gold.
Is inherited gold taxable in India?
Inherited gold is not taxable when you receive it. Capital gains tax applies only when you later sell it, and the previous owner's purchase cost and holding period are used to work out the gain.
Is 24K gold taxable in India?
Yes. GST of 3% applies when you buy 24K gold, the same as any other purity. If you later sell it at a profit, capital gains tax applies based on how long you held it.
This article is for general information and is not tax advice. Gold tax rates in India, including customs duty, have changed more than once recently. Verify current figures with CBIC and the Income Tax Department, and consult a qualified chartered accountant for your specific situation.
