ITR Filing 2026: Earned profit by selling gold? It is important to understand the tax rules before filing returns. The tax treatment on jewellery, digital gold, gold ETF and SGB is different. Even a small mistake can lead to a notice from the Income Tax Department.
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ITR Filing 2026: ITR filing season has started. In such a situation, it is very important for those who have sold gold during the financial year 2025-26 to understand the tax rules. Many times investors keep an eye on the prices of gold, but ignore the tax rules.
Giving information in wrong category may also result in a notice from the Income Tax Department. The special thing is that the tax rules on physical gold, digital gold, gold ETF, gold mutual fund and sovereign gold bond (SGB) are different.
How is the tax on gold decided?
The profit made by selling gold is considered capital gain. The tax depends on the type of gold you bought and how long you kept it with you.
As per current rules, the long term capital gains (LTCG) tax on most gold investments is 12.5%. There is no benefit of indexation in this. Whereas Short Term Capital Gain (STCG) is taxed as per your income tax slab. Therefore, the tax burden on short term gains can be quite high for people falling in the 30% tax slab.
What are the rules on physical gold?
Physical gold includes gold jewelry, coins, bars, and bullion.
If you sell gold within 24 months of purchase, the profit will be considered short term capital gain and will be taxed as per your tax slab. But if the gold is held for more than 24 months, then 12.5% long term capital gains tax will be levied on the profits.
Same rules on digital gold also
The popularity of digital gold has increased rapidly, but in terms of tax, it is treated like physical gold because there is real gold behind it.
Here too, if held for 24 months, the profit will be considered as short term gain and if held more than 24 months, 12.5% LTCG tax will be levied. However, investors should also keep in mind that digital gold is not yet regulated by RBI or SEBI.
Why are Gold ETFs considered better?
Gold ETFs are very popular among investors who want to invest in gold without the worry of storage.
Their biggest feature is that the benefit of long term capital gain is available only after 12 months. If ETF units are sold within 12 months, the profits will be taxable as per the slab rate. If held more than 12 months, 12.5% LTCG tax will be levied.
Gold Mutual Fund rules are different
Gold mutual funds generally invest in gold ETFs instead of purchasing gold directly.
A holding period of 24 months applies here for tax purposes. That is, if the unit is sold before two years, the profit will be considered as short term gain and will be taxed at the slab rate. If you hold more than 24 months, you will have to pay 12.5% LTCG tax.
Biggest tax benefit in SGB
Sovereign Gold Bond (SGB) is considered to be the most attractive gold investment from tax point of view.
If an investor holds the bond for its full maturity i.e. 8 years, then no tax has to be paid on capital gains. However, different rules apply when selling before maturity. If sold within 12 months, profit will be taxable at slab rate. If held more than 12 months, 12.5% LTCG tax will be charged.
Gold Futures and Options
The rules are different for those trading gold futures and options on commodity exchanges.
The profits arising from these are not considered capital gains but business income. Tax is levied on this as per the respective tax slab. In some cases, rules regarding record keeping and audit may also apply.
Is gold received as gift tax free or not?
In our country, it is common to get gold through marriage, family functions and inheritance.
There is no time tax on inherited gold. Similarly, gold received from close relatives like parents, spouse or children is also tax free. Gold received on the occasion of marriage is also completely tax free.
However, if gold worth more than Rs 50,000 is received from a non-relative without any payment, its value may be taxable under the head ‘Income from other sources’. Capital gains tax will be applicable separately on selling it later.
Can tax be saved on gold?
Under Section 54F of the Income Tax Act, in some cases, relief from LTCG tax can be availed by investing the amount received from selling gold in residential property.
However, tax experts recommend that all the conditions should be understood thoroughly before claiming such exemption.
Which gold investment is most tax friendly?
If seen solely from the tax perspective, sovereign gold bonds held till maturity are the most profitable as the capital gains on them are completely tax free.
Whereas among market based options, Gold ETFs are generally considered more tax efficient because in these, the benefit of LTCG is available only after 12 months. In comparison, investors in physical gold, digital gold and gold mutual funds have to wait for more than 24 months.
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