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Income Tax

Tax on Gold in India: GST at Purchase, Capital Gains at Sale

Gold attracts 3% GST when you buy it. Gains on sale are taxed at slab rates within 24 months, or 12.5% without indexation after that.

RM

Written by Rohan Mehta

Published 23 September 2026·6 min read

On this page9 sections
Credsir Income Tax guide cover with a coins icon

Buying gold in India attracts 3% GST on gold bars, coins and jewellery. When you sell, the profit is a capital gain: taxed at your slab rate if you held the gold for 24 months or less, and at 12.5% without indexation if you held it longer. Gold ETFs count as long-term after just 12 months.

Key facts

Item Rule for tax year 2026-27
GST on gold, coins and jewellery 3% (1.5% CGST + 1.5% SGST)
Long-term holding period, physical gold More than 24 months
Long-term holding period, gold ETFs and listed SGBs More than 12 months
Short-term gains Added to income, taxed at slab rates
Long-term gains 12.5%, no indexation (Section 197, Income-tax Act, 2025)
SGB redemption at maturity Tax-free only for original subscribers who hold till maturity
Cash limit per transaction Jeweller cannot accept ₹2,00,000 or more in cash

Sales made from 1 April 2026 fall under the Income-tax Act, 2025. Sales in FY 2025-26 are still reported under the Income-tax Act, 1961, where the rates and holding periods are the same.

GST on gold, jewellery and making charges

Gold bars, gold coins and articles of jewellery all sit in Schedule IV of Notification No. 9/2025-Central Tax (Rate). CGST is 1.5% and SGST is 1.5%, so you pay 3% in total. GST 2.0, which took effect on 22 September 2025, did not change this rate.

Making charges are where bills differ:

  • Ready-made jewellery from a shop. PKC Management Consulting’s explainer treats gold and making as one composite supply, so the whole invoice is taxed at 3%. On ₹1,00,000 of gold plus ₹10,000 of making charges, GST is ₹3,300.
  • Jewellery made from your own gold. The jeweller is doing job work. Notification No. 11/2017-Central Tax (Rate), as amended, taxes job work on Chapter 71 goods other than diamonds at 2.5% CGST, which is 5% with SGST.

Ask for a tax invoice that shows the jeweller’s GSTIN, the gold value, the making charge and the tax on each line. You can check the GSTIN on the GST portal before you pay.

Holding period for gold

Section 2(101) of the Income-tax Act, 2025 defines a short-term capital asset as one held for not more than 24 months. For securities listed on an Indian stock exchange, the limit is 12 months. The split works like this:

  • Jewellery, coins, bars and unlisted gold fund units: long-term after 24 months.
  • Gold ETFs and Sovereign Gold Bonds bought or sold on an exchange: long-term after 12 months.

The 24-month rule for gold dates from the Finance (No. 2) Act, 2024. The CBDT’s capital gains FAQ says the holding period for gold was cut from 36 months to 24 months.

Tax on short-term gains

If you sell within the short-term window, the gain is added to your other income. You pay tax on it at your normal slab rate under the regime you use. Someone in the 30% slab who makes ₹50,000 on gold held for a year pays tax on that ₹50,000 at 30%, plus cess.

The gain is the sale price minus what you paid, including the GST and making charges on your purchase bill. Keep that bill; without it, proving your cost is hard. Our income tax slabs page lists the rates for FY 2026-27.

Tax on long-term gains

Section 197 of the Income-tax Act, 2025 taxes long-term capital gains at 12.5%. There is no indexation, so you cannot raise your cost for inflation. The CBDT FAQ explains that this 12.5% rate replaced the earlier 20% with indexation for transfers from 23 July 2024.

A worked example: you bought jewellery for ₹2,00,000 in 2021 and sell it for ₹4,00,000 in September 2026. The gain is ₹2,00,000 and the tax is ₹25,000 at 12.5%, plus cess.

If your other income is below the basic exemption limit, a resident individual can use the unused part of that limit against the gain before the 12.5% applies. Section 197(2) sets this out. The capital gains calculator works out the figure for you, and our page on capital gains tax rates covers other assets.

Gold ETFs, funds and SGBs compared

Form of gold GST when buying Long-term after Tax on long-term gain
Jewellery, coins, bars 3% 24 months 12.5%
Gold ETF (listed) No GST on units, per PKC 12 months 12.5%
Gold mutual fund (unlisted units) No GST on units, per PKC 24 months 12.5%
SGB sold on exchange None 12 months 12.5%
SGB redeemed at maturity None Not applicable Exempt for original subscribers only

What changed for Sovereign Gold Bonds

The Finance Act, 2026 rewrote Section 70(1)(x) of the Income-tax Act, 2025, with effect from 1 April 2026. Redemption gains are now exempt only if an individual held the bond from the date of original issue till maturity. If you bought SGBs on the stock exchange, the gain is taxable even when you hold them to maturity.

According to the Income Tax Department’s Budget FAQs, as quoted by NISM, early redemption after the lock-in does not qualify for the exemption either. Interest of 2.5% a year on the initial investment is taxable at your slab rate, as the RBI’s SGB FAQ notes. See our Sovereign Gold Bonds guide for how the bonds work.

Cash limits and PAN rules when buying

Section 186 of the Income-tax Act, 2025 bars anyone from receiving ₹2,00,000 or more in cash from one person in a day, for one transaction, or for one event. A jeweller who breaks the rule can face a penalty equal to the cash received, under Section 451. Pay larger bills by UPI, card, cheque or bank transfer.

You also need your PAN for bigger purchases. Business Today’s summary of the Income-tax Rules, 2026 says PAN must be quoted for any purchase of goods or services above ₹2 lakh per transaction.

If you are selling inherited gold, gold received as a gift, or a large quantity, a chartered accountant can confirm your cost and holding period before you file.

Frequently asked questions

What is the GST on gold jewellery?

3%, split as 1.5% CGST and 1.5% SGST. The rate did not change under GST 2.0.

Is GST charged on making charges?

Yes. On ready-made jewellery the full bill is usually taxed at 3%. When a jeweller makes jewellery from your own gold, the labour is job work, taxed at 5%.

Is there a new tax on gold in 2026?

The main change is for Sovereign Gold Bonds. From 1 April 2026, the maturity exemption applies only to original subscribers who hold till maturity. Rates on physical gold stayed at 3% GST and 12.5% long-term capital gains tax.

When does gold jewellery become a long-term asset?

After 24 months. Gold ETFs and listed SGBs become long-term after 12 months.

Do I get indexation on gold sold in 2026?

No. Long-term gains on gold are taxed at 12.5% without indexation.

Can I pay cash for gold worth ₹3 lakh?

No. A jeweller cannot accept ₹2,00,000 or more in cash for one transaction under Section 186 of the Income-tax Act, 2025.

Sources

Go deeper

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Income tax slabs, deductions, capital gains and GST — explained for the current financial year, with calculators that do the old-vs-new regime maths for you.

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