Tradition, Tax & Transparency
Gold and silver in India are no longer viewed only as emotional or cultural assets. With rising prices, digital tracking, and stronger disclosure norms, they are firmly treated as taxable financial assets under Indian tax law.
This guide captures capital gains, GST, digital gold, SGBs, TDS, and reporting rules — in crisp Finin2min format.
1️⃣ Legal Classification (Income-tax Act)
Gold and silver are treated as capital assets under the Income-tax Act, 1961.
Covered assets:
- Physical gold & silver (jewellery, bars, coins)
- Digital gold (treated as physical gold)
- Gold & Silver ETFs
- Sovereign Gold Bonds (SGBs)
2️⃣ Capital Gains Tax — Snapshot
📊 Holding Period Rules
| Asset | STCG | LTCG |
|---|---|---|
| Physical Gold / Silver | ≤ 24 months | > 24 months |
| Digital Gold | ≤ 24 months | > 24 months |
| Gold / Silver ETFs | ≤ 12 months | > 12 months |
| SGBs (on exchange sale) | ≤ 12 months | > 12 months |
📌 Digital gold is treated like physical gold — same 24-month holding period.
💰 Tax Rates (Post Amendments)
| Type | Rate | Indexation |
|---|---|---|
| STCG | Slab rate | ❌ |
| LTCG | 12.5% | ❌ |
📌 Earlier 20% LTCG with indexation on gold no longer applies.
3️⃣ Long-Term Holding Advantage (Example)
| Particulars | Amount (₹) |
|---|---|
| Purchase value | 5,00,000 |
| Sale value | 8,00,000 |
| Capital gain | 3,00,000 |
| LTCG @ 12.5% | 37,500 |
✔ Long-term holding reduces tax vs slab-rate STCG.
4️⃣ GST on Gold & Silver (Purchase Stage Only)
GST applies only at acquisition, not on resale by individuals.
📊 GST Structure
| Component | GST |
|---|---|
| Gold / Silver value | 3% |
| Making / job work charges | 5% |
📌 Example
| Item | Amount (₹) | GST |
|---|---|---|
| Gold value | 1,00,000 | 3,000 |
| Making charges | 10,000 | 500 |
| Total GST | 3,500 |
📌 GST becomes part of cost of acquisition for capital gains.
5️⃣ Digital Gold — Tax Clarification
✔ Digital gold is treated as physical gold for tax purposes
✔ 24-month holding period applies
✔ Sale results in capital gains (STCG / LTCG)
✔ No GST credit available to individuals
📌 Platform form (app / wallet) does not change tax treatment.
6️⃣ Sovereign Gold Bonds (SGBs) — Special Rule
SGBs enjoy unique tax benefits under law.
📊 SGB Tax Treatment
| Scenario | Tax Impact |
|---|---|
| Held till maturity (8 years) | LTCG fully exempt |
| Sold on exchange before maturity | Taxed like ETFs |
| Interest (2.5% p.a.) | Taxable as income |
📌 Pre-maturity sale →
- ≤ 12 months: STCG (slab)
- 12 months: LTCG @ 12.5% (no indexation)
7️⃣ Search & Seizure Protection (CBDT Instruction 1916)
During income-tax search, jewellery up to prescribed limits cannot be seized, even without bills.
| Person | Quantity Protected |
|---|---|
| Married woman | 500 grams |
| Unmarried woman | 250 grams |
| Male member | 100 grams |
📌 This is seizure protection, not blanket exemption from explaining source.
8️⃣ TDS on Sale of Gold (High-Value Transactions)
📊 Section 194Q / 206C Overview
| Seller | Buyer | Threshold | TDS |
|---|---|---|---|
| Jeweller | Any person | > ₹10 lakh | 1% TDS |
| Individual (seller) | Business buyer | > ₹50 lakh | 1% TDS |
📌 Applies mainly in high-value bullion / jewellery transactions.
📌 TDS reflects in Form 26AS / AIS.
9️⃣ Reporting & AIS Tracking
Gold transactions are increasingly digitally tracked.
✔ High-value gold purchases & sales reflect in AIS (Annual Information Statement)
✔ TDS entries auto-populate
✔ Mismatch may trigger clarification notices
📌 Best practice:
Always reconcile:
- Sale value
- Capital gains reported
- AIS / Form 26AS data
🔟 Gold Loans — Tax Treatment Recap
| Usage | Tax Impact |
|---|---|
| Personal use | Interest not deductible |
| Business use | Interest deductible |
| Disclosure | Must be shown as secured loan |
📌 Loan itself is not taxable; usage & disclosure matter.
🔚 Finin2min Bottom Line
Gold remains a store of value —
but taxation rewards discipline, disclosure, and duration.
✔ Hold long
✔ Choose the right instrument
✔ Track AIS
✔ Disclose clearly
Tradition + tax awareness = real wealth preservation
⚠️ Disclaimer
For informational purposes only. Based on Income-tax Act, 1961, GST law, CBDT instructions, and prevailing rules for FY 2025–26. Subject to change.
Article related to –
Gold taxation India
Silver taxation India
Gold capital gains tax
Gold ETF taxation India
Digital gold tax treatment
Sovereign Gold Bond tax exemption
GST on gold jewellery
CBDT Instruction 1916 gold seizure
TDS on gold sale
AIS gold transaction reporting
Income tax on gold sale
Gold investment tax planning
FY 2025–26 gold tax rules
