The article “Tax on Gold in India: A Comprehensive Guide 2025” covers all relevant topics such as different taxes on gold, tax saving tips, etc.
Introduction
Gold has always been an integral part of Indian culture and economy. It is not only a symbol of wealth and prosperity but also a significant investment option. Given its high demand, the government of India has imposed various taxes on the purchase, sale, and possession of gold to regulate its trade and curb illicit transactions. Understanding the taxation framework on gold in India is essential for both investors and consumers. This article provides a comprehensive guide on the various taxes applicable to gold in India, including Goods and Services Tax (GST), import duty, capital gains tax, and other related levies.
Import Duty on Gold
India is one of the largest importers of gold, as domestic production is insufficient to meet the demand. The government imposes an import duty to control excessive importation and manage the country’s trade deficit.
Current Import Duty Rates
As of 2024, the import duty on gold in India is structured as follows:
- Basic Customs Duty (BCD): 12.5%
- Agriculture Infrastructure and Development Cess (AIDC): 2.5%
- Social Welfare Surcharge (SWS): 10% of BCD (effectively 1.25%)
Thus, the total effective import duty on gold stands at approximately 15%.
GST on Gold Purchase, Jewellery, Coins, Biscuit & Bar
In India, the Goods and Services Tax (GST) on gold is structured as follows:
Gold Value: A GST rate of 3% is applied to the value of gold, regardless of its form—be it jewellery, coins, bars, or biscuits.
Making Charges: An additional GST of 5% is levied on the making charges associated with crafting gold jewellery.
Illustrative Example:
If you purchase gold jewellery valued at ₹100,000 with making charges of ₹10,000:
- GST on Gold Value: 3% of ₹100,000 = ₹3,000
- GST on Making Charges: 5% of ₹10,000 = ₹500
Total GST Payable: ₹3,000 (on gold value) + ₹500 (on making charges) = ₹3,500
Therefore, the total cost would be ₹100,000 (gold value) + ₹10,000 (making charges) + ₹3,500 (GST) = ₹113,500.
It’s important to note that these GST rates are consistent across all forms of gold purchases in India.
Capital Gains Tax on Gold Investments
Investing in gold can generate capital gains, which are subject to taxation under the Income Tax Act, 1961.
Short-Term Capital Gains (STCG)
If gold is sold within three years of purchase, any profit earned is considered short-term capital gains (STCG) and is taxed as per the individual’s income tax slab rate.
Long-Term Capital Gains (LTCG)
If gold is sold after three years of purchase, it qualifies as long-term capital gains (LTCG) and is taxed at 20% with indexation benefits.
For example, if an individual buys gold for ₹5,00,000 and sells it after five years for ₹8,00,000, the indexed cost of acquisition may be adjusted to reduce the taxable amount, lowering the overall tax liability.
Tax on Digital Gold, Gold ETFs, and Sovereign Gold Bonds
In addition to physical gold, investors also opt for digital gold, Gold ETFs, and Sovereign Gold Bonds (SGBs), which have distinct taxation policies.
Digital Gold & Gold ETFs
The taxation rules for digital gold and Gold ETFs are similar to physical gold:
- Short Term Capital Gains Tax: Taxed as per individual income tax slabs
- Long Term Capital Gains Tax: Taxed at 20% with indexation benefits
Sovereign Gold Bonds (SGBs)
Sovereign Gold Bonds (SGBs) are issued by the Reserve Bank of India (RBI) and offer tax benefits:
- Interest earned (2.5% per annum) is taxable as per income tax slabs.
- Capital gains on redemption of SGBs (after maturity) are exempt from tax.
- If SGBs are sold before maturity in the secondary market, LTCG tax of 20% with indexation applies.
Wealth Tax and Inheritance Tax on Gold
Although Wealth Tax was abolished in 2015, inherited gold or gifted gold may still attract taxes under the Income Tax Act.
If gold is received as a gift from a relative, it is not taxable. If received from a non-relative and exceeds Rs. 50,000 in a year, it is taxed as “Income from Other Sources” at applicable income tax slab rates.
Gold and GST Input Credit for Businesses
Businesses dealing in gold can claim GST Input Tax Credit (ITC) on gold purchases used for resale. However, ITC is not available for end consumers.
How to avoid tax on gold?
In India, taxes on gold purchases and sales include GST, capital gains tax, and import duties. While tax evasion is illegal, here are some legal ways to minimize or avoid taxes on gold:
Buy Gold in Tax-Free Forms
Sovereign Gold Bonds (SGBs): Issued by the RBI, SGBs offer tax-free maturity if held until redemption. They also give 2.5% annual interest, making them a great investment.
Digital Gold & ETFs: Gold ETFs and mutual funds do not attract GST (unlike physical gold) and offer better tax efficiency.
Avoid GST on Gold Purchases
Buy Gold Coins from Banks: While banks sell gold coins at a premium, some do not charge GST. Purchase from States with Lower GST Impact. Some jewelers may offer discounts to offset GST.
Hold Gold for More Than 3 Years
Long-term capital gains tax (LTCG) on gold (20% with indexation benefit) applies after 3 years. Selling gold after this period reduces tax liability compared to short-term gains (which are taxed as per your income slab).
Gift Gold to Family Members
- Gifts between immediate family members (parents, spouse, children) are tax-free under Indian tax laws. If you later sell it, the tax liability shifts to them.
- Gifts from non-relatives above ₹50,000 are taxable under income tax laws.
Inherit Gold Instead of Buying
No tax on inherited gold; however, tax applies when selling inherited gold (capital gains tax).
Use Agricultural Income (If Applicable)
If you have tax-free agricultural income, using it to buy gold ensures that you don’t have to pay additional tax on the source of funds.
Read More: 10 Points On Income Tax Bill 2025
