Tax at purchase: 3% GST
When you buy gold in India today, 3% GST is charged on the total of (gold value + making charges) at the point of sale. There is no input-tax credit for individual buyers. The 3% rate applies to:
- Hallmarked gold jewellery
- Gold coins purchased from jewellers
- Gold bars purchased from jewellers
- Bank-issued gold coins
SGBs are exempt from GST at issue, since they are securities, not commodities.
Tax on resale: capital gains
If you sell physical gold (jewellery, coins, bars), capital gains tax applies:
- Held more than 36 months: Long-term capital gains, taxed at 20% with indexation benefit.
- Held 36 months or less: Short-term capital gains, added to your income and taxed at slab rate.
Indexation benefit
Indexation lets you adjust the purchase cost upward for inflation, reducing the taxable gain. The Cost Inflation Index (CII) is published annually by the Income Tax Department. For example, gold bought for ₹3,00,000 in FY2015–16 (CII 254) and sold in FY2025–26 (CII assumed ~370) gets indexed cost ≈ ₹4,37,000, so only the gain above that is taxed.
Tax on SGB
- Held to maturity (8 years): capital gains exempt. The entire redemption amount is tax-free for capital gains purposes.
- Sold on stock exchange before maturity: Long-term gains taxed at 20% with indexation; short-term at slab rate.
- Interest income (2.50% coupon): Taxable at slab rate as "income from other sources".
Tax on gold ETF and gold mutual funds
Per the 2023 Finance Bill, gold ETFs (and other debt-oriented mutual funds) are taxed at the investor's slab rate regardless of holding period. Indexation for LTCG is no longer available for these instruments.
Inheritance and gifts
- Gold inherited from a relative (parents, grandparents, spouse, siblings) is not taxable at the time of inheritance.
- Gold received as a wedding gift from family is exempt.
- Gold received as a gift from a non-relative above ₹50,000 in aggregate per year is taxable at the recipient's slab rate.
- When the inherited gold is later sold, capital gains apply, with the original (inherited) cost basis carried over.
Customs duty on imported gold
Travellers entering India from abroad face limits on the gold they can bring duty-free. Above the duty-free allowance (which differs for resident men, women, and children), customs duty applies — currently around 10–15% plus GST. Carrying gold beyond the declared limits without paying duty is a customs offence.
No wealth tax
Wealth tax was abolished in India in FY2015–16. There is no annual tax on the gold you simply own and hold.
This is educational content, not tax advice. Tax rules change with each Union Budget — consult a chartered accountant for your specific situation.