Capital Gains Tax on Gold in India (FY 2024-25): How to Calculate & Save Tax
- Dipali Waghmode
- Aug 29
- 10 min read
Updated: Oct 10
The capital gains tax on gold is a crucial consideration for anyone selling their gold investments. Wondering how your gold sale will be taxed under the Income Tax Act for FY 2024-25? Here's a clear breakdown of how the 23 July 2024 amendment impacts gold taxation, covering short-term and long-term gains, updated holding periods, and new tax rates applicable for AY 2025-26.
Table of Index
Understanding Capital Gains on Gold: Short-Term vs. Long-Term
Capital gains tax on gold applies because gold is considered a 'capital asset' under tax laws. The tax you pay depends entirely on the gold holding period, which is the duration you own the asset before selling it. This period determines if your profit is a short-term capital gain (STCG) or a long-term capital gain (LTCG).
The critical difference between short-term capital gains on gold and long-term capital gains on gold is the 36-month timeline.
Short-Term Capital Gain (STCG): If you sell your gold within 36 months (3 years) of buying it, the profit is an STCG.
Long-Term Capital Gain (LTCG): If you sell your gold after holding it for more than 36 months, the profit is an LTCG.
This distinction is vital because the tax treatment for each is very different. Revised Classification (After 23 July 2024)
Feature | Short-Term Capital Gain (STCG) | Long-Term Capital Gain (LTCG) |
Holding Period | Sold within 24 months of purchase | Sold after 24 months of purchase |
Tax Treatment | Added to your total income and taxed as per your income slab rate | 12.5% flat, no indexation benefit |
Applicable Assets | Physical gold, jewellery, gold coins, ETFs, and gold mutual funds | Physical gold, jewellery, gold coins, ETFs, and gold mutual funds |
Tax on Different Types of Gold Investments: A Complete Comparison
The tax on gold investments varies depending on the form in which you hold it. The rules for physical gold are different from digital or paper-based gold like Gold ETFs and Sovereign Gold Bonds (SGBs).
A tax on physical gold is the most common query. The tax on gold ETF investments follows similar principles but with nuances in how they are traded. A unique option is the Sovereign Gold Bond tax structure, which offers significant advantages for long-term investors. Understanding the capital gain on SGB is particularly important because the tax exemption upon maturity is a special feature guaranteed by the RBI and the Government of India.
Here is a complete comparison of the tax implications for different gold investments for the Assessment Year 2025-26.
Investment Type | Holding Period (Before/ After 23 July 2024) | LTCG Tax Rate & Indexation (Before/ After 23 July 2024) | STCG Tax Rate & Indexation (Before/ After 23 July 2024) |
Physical Gold / Jewellery | > 36 months; > 24 months | 20% with indexation; 12.5% flat (no indexation) | Slab rate (≤ 36 months); Slab rate (≤ 24 months); no indexation |
Gold ETFs / Gold Mutual Funds | > 36 months; > 12 months | 20% with indexation; 12.5% flat (no indexation) | Slab rate (≤ 36 months); Slab rate (≤ 12 months); no indexation |
Sovereign Gold Bonds (held till maturity) | N/A | No capital gains | N/A |
Sovereign Gold Bonds (sold before maturity) | > 12 months; > 12 months | 20% with indexation or 10% without (whichever beneficial); 12.5% flat (no indexation) | Slab rate (≤ 12 months); no indexation; Slab rate (≤ 12 months); no indexation |
Note: Gold ETFs are an efficient way to invest in gold electronically. For official SGB rules, you can refer to the RBI's official SGB guidelines.
How to Calculate Long-Term Capital Gains (LTCG) on Gold with Indexation
To properly calculate how to calculate capital gains on gold held for the long term, you must understand indexation. The indexation benefit on gold is a crucial tool that adjusts your purchase price for inflation, which lowers your taxable profit.
This adjustment uses the Cost Inflation Index (CII), a figure notified each year by the Central Board of Direct Taxes (CBDT). The CII for gold helps in finding the inflation-adjusted cost, known as the Indexed Cost of Acquisition.
Here’s the step-by-step process:
Formula for LTCG Calculation
LTCG = Final Sale Price - (Indexed Cost of Acquisition + Indexed Cost of Improvement + Transfer Expenses)
The most important part is the indexed cost of acquisition formula:
Indexed Cost of Acquisition = Original Purchase Price x (CII of Sale Year / CII of Purchase Year)
Example Calculation:
CII for Purchase Year (2015-16):Â 254
CII for Sale Year (2024-25):Â 363
1. Gold Purchased Before 23 July 2024 and Sold Before 23 July 2024
You can still claim indexation benefit and compute tax using the Cost Inflation Index (CII).
Mrs. Sharma bought gold jewellery in June 2015 for ₹5,00,000 and sold it in June 2024 for ₹12,00,000.
Transfer expenses are ₹10,000.
CII for FY 2015–16 = 254, CII for FY 2024–25 = 363.
Calculation:
Indexed Cost = ₹5,00,000 × (363 ÷ 254) = ₹7,14,567
LTCG = ₹12,00,000 – (₹7,14,567 + ₹10,000) = ₹4,75,433
Tax = 20% of ₹4,75,433 = ₹95,087 (+ 4% cess)
Final Tax Payable: ₹98,890 (approx.)
2. Gold Purchased Before 23 July 2024 but Sold After 23 July 2024
The new rule removes indexation. The gain is taxed at a flat 12.5% rate on the difference between sale price and actual cost.
Mrs. Sharma bought gold jewellery in June 2015 for ₹5,00,000 and sold it in October 2024 for ₹12,00,000.
Transfer expenses are ₹10,000.
Calculation:
LTCG = ₹12,00,000 – (₹5,00,000 + ₹10,000) = ₹6,90,000
Tax = 12.5% of ₹6,90,000 = ₹86,250 (+ 4% cess)
Final Tax Payable: ₹89,700 (approx.)
Cost Inflation Index (CII) Table
Here are the CII values for recent years. You can find the full official Cost Inflation Index (CII) table on the Income Tax Department's website.
Financial Year | CII |
2024-25 | 363 |
2023-24 | 348 |
2022-23 | 331 |
2021-22 | 317 |
2020-21 | 301 |
2019-20 | 289 |
2018-19 | 280 |
2017-18 | 272 |
2016-17 | 264 |
2015-16 | 254 |
How to Calculate Short-Term Capital Gains (STCG) on Gold
Calculating the tax on gold sold within 3 years is much simpler. To calculate short-term capital gains, you don't get any indexation benefit. The profit is simply the difference between the sale price and the purchase price.
This profit is then added to your total annual income and taxed according to your applicable income tax slab rate.
Formula for STCG Calculation
STCG = Final Sale Price - Original Purchase Price - Transfer Expenses
Example Calculation:
Imagine Mr. Kumar bought gold coins in May 2023 for ₹2,00,000. He sold them in April 2024 for ₹2,50,000, without any transfer expenses.
STCG = ₹2,50,000 - ₹2,00,000 - ₹0
STCG = ₹50,000
This ₹50,000 profit is added directly to Mr. Kumar's total taxable income for the year. If he is in the 30% tax bracket, he will pay ₹15,000 (plus cess) as tax on this gain.
Parameter | Before 23 July 2024 | After 23 July 2024 |
STCG Holding Period | ≤ 36 months | ≤ 24 months |
STCG Tax Rate | As per slab rate | As per slab rate |
Indexation | Not available | Not available |
Special Case: Tax on Inherited or Gifted Gold
The tax on inherited gold is a common point of confusion. While you don't pay any tax when you receive gold as an inheritance or a gift from specified relatives, a tax liability arises when you decide to sell it. The profit from selling inherited jewellery is taxed as capital gains.
There are two critical rules for calculating capital gains on gifted gold:
Holding Period: The period for which the previous owner held the gold is added to your holding period to determine if the gain is short-term or long-term.
Cost of Acquisition: Your cost of acquisition is the price the original owner paid for the gold. If the original purchase was before April 1, 2001, you can use the Fair Market Value as of that date.
Example Scenario:
Your mother bought gold jewellery in 2010 for ₹3,00,000 and gifted it to you in 2018. You sold it in 2024 for ₹9,00,000.
Holding Period:Â Since your mother held it from 2010, the total holding period is well over 24 months, making it a long-term capital gain.
Cost of Acquisition: ₹3,00,000 (the amount your mother originally paid).
Tax Treatment:
If the gold is sold before 23 July 2024, LTCG will be taxed at 20% with indexation.
If the gold is sold on or after 23 July 2024, LTCG will be taxed at 12.5% flat, without indexation.
How to Save Capital Gains Tax on Gold: Your Options Under Section 54F
A key strategy for how to save capital gains tax on gold involves using Section 54F of the Income Tax Act. This section provides a powerful way to get an exemption on long-term capital gains (LTCG) from selling any asset other than a house, including gold.
The primary condition for this reinvestment of capital gains is to use the entire net sale proceeds to buy or construct a new residential house property.
Here are the rules to claim exemption under Section 54F:
The exemption is available only to individuals and Hindu Undivided Families (HUFs).
You must reinvest the entire net consideration (sale price minus transfer expenses) to get a full tax exemption. If you invest only a portion, the exemption will be proportionate.
On the date of selling the gold, you should not own more than one other residential house.
If you cannot invest the amount before filing your tax return, you can deposit it in a Capital Gains Account Scheme (CGAS) with a bank to claim the exemption.
Investment Timeline for the New House
Condition | Timeline |
Purchase New House | Within 1 year before or 2 years after the date of sale. |
Construct New House | Within 3 years after the date of sale. |
Disclaimer: The conditions under Section 54F can be complex. It is highly recommended to consult a tax expert for personalized advice before making any investment decisions.
Conclusion: Key Takeaways for Gold Investors
Managing taxes on gold investments has become simpler after the July 2024 amendment. The tax you pay now depends on how long you hold the gold and when you sell it. If you sell your gold after holding it for more than 24 months, it qualifies as a long-term capital asset and is taxed at a flat rate of 12.5% without indexation.
However, gold sold before 23 July 2024 continues to be taxed under the old rule, 20% with indexation and a 36-month holding period. Sovereign Gold Bonds (SGBs) remain one of the most tax-efficient investment options, as their maturity proceeds are entirely exempt from capital gains tax. You can also reduce your tax liability by reinvesting your sale proceeds in a residential property under Section 54F. Since tax laws and filing requirements can change frequently, it’s best to seek professional help, connect with a TaxBuddy expert to ensure accurate reporting, optimized tax savings, and a seamless filing experience.
FAQs
1. What is the capital gains tax on gold in India for AY 2025–26?Â
The tax on gold depends on the holding period and date of sale. If you sell gold on or after 23 July 2024 and have held it for more than 24 months, the gain is treated as long-term capital gain (LTCG) and taxed at a flat 12.5% without indexation. If sold within 24 months, it’s a short-term capital gain (STCG) and taxed at your income slab rate. For sales before 23 July 2024, the old rule applies — 20% LTCG with indexation and a 36-month holding period.
2. Is there a tax on selling old family jewellery?Â
Yes. Selling old family jewellery attracts capital gains tax. If it’s sold on or after 23 July 2024 and held for more than 24 months, LTCG will apply at 12.5% without indexation. Jewellery sold before that date or held under the old regime is taxed at 20% with indexation.
3. How is tax calculated on inherited gold?Â
You don’t pay tax when you receive gold as inheritance or a gift. However, when you sell it, capital gains tax applies. The holding period and purchase cost of the original owner are considered. If the sale happens after 23 July 2024, and the combined holding exceeds 24 months, the LTCG is taxed at 12.5% without indexation.
4. Is GST applicable when I sell my old gold?Â
No, individuals selling old jewellery to a jeweller are not required to pay GST, as it’s not considered a business activity. However, the jeweller will charge GST when they sell new jewellery to you.
5. Do I need to declare gold holdings in my Income Tax Return (ITR)?Â
You don’t need to declare your gold holdings every year. But if you sell gold and make a profit, the capital gains must be reported in your ITR under the applicable income head.
6. Is there any tax on Sovereign Gold Bonds (SGBs)?Â
Capital gains from SGBs are fully tax-exempt if you hold them until maturity (8 years). The annual interest you receive is taxable at your slab rate. If you sell them on the exchange before maturity, the normal capital gains tax rules apply — 12.5% flat for LTCG (if held over 24 months) or slab rate for STCG.
7. Can I offset capital gains from gold against other losses?Â
Yes. You can set off long-term capital losses against long-term capital gains, and short-term losses against both short-term and long-term gains.
8. What is the TDS on the sale of gold jewellery?Â
There is no TDS deducted when an individual sells gold jewellery. You must calculate and pay the capital gains tax yourself while filing your ITR. However, large cash transactions above ₹2 lakh may attract reporting obligations under the Income Tax Act.
9. How is capital gain on digital gold taxed?Â
Digital gold follows the same tax treatment as physical gold. If held for 24 months or less, it’s STCG taxed at your slab rate. If sold after 24 months (and sold on or after 23 July 2024), it’s LTCG taxed at 12.5% flat without indexation.
10. What happens if I don’t reinvest the capital gains in a house within the time limit under Section 54F?Â
If you deposit the sale proceeds in a Capital Gains Account Scheme (CGAS) but fail to use them within 3 years (for construction), the unutilized amount becomes taxable as LTCG in the year the period expires.
11. Is the tax different for gold coins, bars, and jewellery?Â
No, the tax treatment is the same for all forms of physical gold, whether coins, bars, or jewellery. The taxation depends on the holding period and date of sale, not the form of gold.
12. How do I find the purchase price of gold if I have no receipt?
 If you don’t have a purchase receipt, you can get a valuation certificate from a registered valuer. For inherited gold, the Fair Market Value (FMV) as of 1 April 2001 or the original purchase cost (whichever is later) can be used for capital gains computation.
