Gold Price Hits Rs. 1 lakh; What are Tax implications on Gold?

As the gold prices have crossed Rs. 1 lakh for 10 grams on April 22. Experts suggest that the surge is being driven by global uncertainties, including the US-China trade war. Additionally, festivals like Akshaya Tritya have also increased the gold demand in India. Many investors are turning to gold as a safe-haven asset during such economic uncertainty. However, it’s important to understand the gold taxation on buying gold.

For Physical and Digital Gold Jewellery

The income tax rules on buying and selling physical and digital gold are the same.

GST on Gold

On buying gold jewellery (Physical or digital gold), you will be required to pay Goods and Services Tax (GST) at 3%. The GST is imposed on the gold jewellery prices along with the cost of making it.

Gold a Capital Asset

The capital gains tax is also applicable when you are exchanging your old jewellery with new one. As per the Income Tax rules, the long-term capital gains (LTCG) are taxed at the rate of 12.5% (if the old gold jewellery is sold after holding it for 2 years). While short-term capital gains (STCG) is applicable as per the tax slabs to your income.

Gold Funds and Gold ETFs Taxation: Budget 2025

Gold Funds:

• Short-Term Capital Gains (STCG): If you sell a gold mutual fund before 24 months, the profit you make will be treated as short-term capital gains (STCG). These gains will be taxed based on the income tax slabs that apply to your income.
• Long-Term Capital Gains (LTCG): If you hold the gold mutual fund for more than 24 months and then sell it, the profit will be considered long-term capital gains (LTCG). LTCG is taxed at 12.5%, but you won’t get the benefit of adjusting for inflation (no indexation benefit).

Gold ETFs:

• Short-Term Capital Gains (STCG): For listed gold ETFs, if you sell them before 12 months, the profit is considered short-term capital gains (STCG) and will be taxed based on your income tax slabs.
• Long-Term Capital Gains (LTCG): If you hold a listed gold ETF for more than 12 months and sell it, the profit is treated as long-term capital gains (LTCG). LTCG will be taxed at 12.5%, and just like gold mutual funds, you won’t get the indexation benefit.

Shares of Listed Companies dealing with Gold Products

Many companies like Tanishq, Kalyan Jewellers are in the business of selling Gold Products. As per the Income Tax rules, the long-term capital gains (LTCG) on shares of listed entities are taxed at the rate of 12.5% (if share sold after holding it for 1 year). While short-term capital gains (STCG) is taxed at rate of 20%.