income tax
The ITR Filing season of 2026 has started and in such a situation, it is very important for the investors who have sold gold during the financial year 2025-26 to understand the tax rules. Investing in gold is not limited only to the increase in price, but the tax on profits from it also affects your earnings. Different tax rules apply to physical gold, digital gold, gold ETFs, gold mutual funds and sovereign gold bonds (SGB). Therefore, before filling ITR, it is important to have correct information about them.
The profit made from selling gold comes under the category of capital gain. The tax rate depends on the type of gold the investor bought and for how long he kept it. Under the current rules, long term capital gains (LTCG) are taxed at 12.5%, while short term capital gains (STCG) are taxed as per the income tax slab of the investor.
What are the tax rules on physical gold?
Physical gold includes gold jewellery, coins, bars and bullion. If the investor sells the gold within 24 months of purchase, then the profit made will be considered as short term capital gain and will be taxed as per the tax slab. At the same time, if gold is kept for more than 24 months, then the profit on sale will be considered as long term capital gain and 12.5% tax will have to be paid on it.
Same rules apply to digital gold also
The tax rules for those investing in digital gold are almost the same as for physical gold. Since digital gold is backed by actual gold, it is treated like physical gold from tax point of view. If digital gold is sold within 24 months, the profit will be taxed as per the slab rate. At the same time, 12.5% LTCG tax will have to be paid on holding more than 24 months. However, investors should also keep in mind that digital gold is not yet under the regulation of RBI or SEBI.
Get the benefit of LTCG quickly in Gold ETF
Gold ETFs are popular among investors who want to invest in gold without the worry of storage. This is also considered an attractive option from tax point of view. The benefit of long term capital gain is available in Gold ETF after only 12 months of holding. If the investor sells the unit within 12 months, the profit will be taxed at the slab rate. Whereas if sold after keeping it for more than 12 months, 12.5% LTCG tax will be applicable.
What is the tax system on Gold Mutual Fund?
Gold mutual funds generally invest in gold ETFs. However, in terms of tax, different rules apply to them. If the units are sold before 24 months, the profit will be treated as short term capital gain and will be taxed as per income tax slab. On the other hand, selling after holding for more than 24 months will attract 12.5% long term capital gains tax.
The biggest tax benefit is available in SGB
Sovereign Gold Bond (SGB) is considered to be the most beneficial gold investment from tax point of view. If the investor holds the bond till its full maturity of 8 years, then no tax has to be paid on capital gains. However, different rules apply when selling before maturity. Profits on sale within 12 months will be taxed at the slab rate, while 12.5% LTCG tax will be applicable on holdings beyond 12 months.
Different rules on gold futures and options
Income from trading in gold futures and options in the commodity market is not considered capital gain. It is kept in the category of business income. In such cases, tax liability is decided as per the income tax slab of the investor. In some cases, rules related to accounting records and tax audits may also apply.
What is the tax on gold received as a gift?
Gold inherited or gifted from close relatives like parents, spouse and children is tax free. Gold received on the occasion of marriage is also considered tax free. However, if gold worth more than Rs 50,000 is received as a gift from a non-relative, its value may be taxable under the head ‘Income from other sources’. Capital gains tax will also be applicable on selling it later.
Which gold investment is the most tax friendly?
If seen only from the tax point of view, Sovereign Gold Bonds held till maturity are the most profitable as the capital gains on them remain completely tax free. Whereas among market-based investment options, Gold ETF is considered relatively more tax efficient because in it the benefit of long term capital gain is available only after 12 months. Therefore, before ITR Filing 2026, investors should correctly calculate the tax liability based on the type and holding period of their gold investment.
Also read- 8th Pay Commission will visit Kolkata in July, employees get another chance to present their demands.
