Tax Guide for Gold Jewellery, Coins, ETFs, and Sovereign Gold Bonds (SGBs)

Gold has taken centre stage in 2025. From coins and jewellery to ETFs and bonds, most forms of gold investment have delivered strong returns. In a year when equities struggled, gold did well. But while returns can be attractive, taxation on gold profits is often misunderstood. This guide explains how different gold formats are taxed and what you can do to plan better.

How Sovereign Gold Bonds (SGBs) Are Taxed

The government stopped fresh SGB issuances in February 2024, but many existing bonds remain active.

• Interest income: SGBs pay 2.5% interest per year (paid semi-annually). This is taxable under “Income from Other Sources” at your slab rate.
• Redemption at maturity (8 years): Capital gains are fully exempt when redeemed through the RBI window (Section 47(viic)).
• If sold early on an exchange:
  • Sold within 12 months → Short-term capital gain (STCG), taxed at your slab rate.
  • Sold after 12 months but before 8 years → Long-term capital gain (LTCG), taxed at 12.5% flat, without indexation.

Key takeaway: Holding SGBs till maturity offers the best post-tax outcome.

Taxation of Gold ETFs and Gold Mutual Funds

From FY 2024–25, gold ETFs are aligned with listed assets for defining LTCG.

• Gold ETFs
  • Held for 12 months or more → LTCG at 12.5% without indexation.
  • Held for less than 12 months → STCG at your slab rate.


• Gold Mutual Funds (FoFs investing in gold ETFs)
  • Held for 24 months or more → LTCG at 12.5% without indexation.
  • Held for less than 24 months → STCG at your slab rate.

Gold ETFs are listed on exchanges, so they have a shorter 12-month LTCG threshold. Gold mutual funds are unlisted, so the 24-month period applies.

Taxation of Gold Coins and Digital Gold

The CBDT treats physical gold, gold coins, and digital gold similarly for capital gains taxation.

• Buying physical gold attracts 3% GST. Digital gold does not attract GST at purchase.
• Held for 24 months or more → LTCG at 12.5% without indexation.
• Held for less than 24 months → STCG at your slab rate.

Note: Digital gold is convenient but is not SEBI- or RBI-regulated.

Taxation of Futures and Options on Gold

Trading gold via futures or options (e.g., on MCX) is treated as business income, not speculative income.

• Profits are taxed as business income at your slab rate.
• Reasonable expenses (brokerage, internet, research tools) can be claimed against this income.

Inheritance and Gifting of Gold

• Inheritance: No tax on receipt. Tax applies only when the inherited gold is sold. For capital gains, the original owner’s purchase cost is used.


• Gifting:
  • Gifts from specified relatives (parents, spouse, siblings, children, etc.) are exempt.
  • Gifts from non-relatives above ₹50,000 in value are taxable as “Income from Other Sources.”
  • Gold gifted at weddings is exempt irrespective of the donor’s relation.

Can You Save Tax by Reinvesting Gold Sale Proceeds?

Yes, if the gains are long term, these options can lower tax outgo:

• Section 54F (Residential House): Reinvest the sale proceeds into one residential house. Purchase within 1 year before or 2 years after the sale (or construct within 3 years). The upper limit is ₹10 crore. You cannot purchase another house within 3 years.
• Section 54EC (Specified Bonds): Invest the capital gain (not the full sale value) into REC/NHAI bonds within 6 months of sale. The maximum exemption is ₹50 lakh.

For detailed capital gains basics, see: Capital Gains Tax in India (Guide). For house-related reinvestment rules, see: Section 54F Exemption Guide.

Summary: How Different Gold Forms Are Taxed

Need Help Deciding What to Do With Your Gold?

Before you buy or sell, understand the post-tax impact on your total return. If you want a second opinion on rebalancing, we can help you plan it.

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Quick Recap

• Hold longer to reduce tax. SGBs held to maturity are the most tax-efficient.
• Gold ETFs reach LTCG status at 12 months; gold MFs and coins/digital gold at 24 months.
• F&O profits are business income at slab rate.

FAQs

1. Is profit from selling gold taxable in India?

Yes. If you sell at a profit, you pay capital gains tax. The rate and holding period depend on the gold format (ETF, MF, coins, jewellery, SGB).

2. Is SGB redemption at maturity tax-free?

Yes. Capital gains on SGBs redeemed through the RBI window at 8 years are exempt. The interest you receive is still taxable at slab rate.

3. How is tax calculated on gold jewellery or coins?

Held for 24 months or more → LTCG at 12.5% without indexation. Held for less than 24 months → STCG at your slab rate.

4. Are gold mutual funds taxed like equity funds?

No. Gold mutual funds are fund-of-funds investing in gold ETFs. They are not equity-oriented for tax purposes. LTCG applies after 24 months at 12.5% without indexation; otherwise, STCG at slab rate.

5. Can I save tax by reinvesting gold sale proceeds?

Yes. For long-term gains, you may use Section 54F (one residential house) or Section 54EC (REC/NHAI bonds within 6 months). Conditions and limits apply.

6. Is digital gold regulated?

Digital gold is not SEBI- or RBI-regulated. Understand the risks and terms before investing.

Disclaimer: This article is for educational purposes only and should not be construed as tax advice. Please consult a qualified tax professional before making investment or redemption decisions.