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Kolkata: Gold prices are on a relentless march. The price of 10 grams of gold (24 carat) has breached a hitherto unthinkable level of Rs 1,21,000. It has appreciated by almost 50% in 2025. Analysts are wondering when the correction in the prices of the precious metal will take place. Taking advantage of the elevated prices, many are planning to sell their gold holdings and book profits before the correction sets in. However, before selling, one needs to know how much tax will be applicable on one, so that the diminution in gains on account of taxes is minimised.
There are several ways of investing in gold -- buying jewellery, investing in gold ETF and through gold mutual funds. The rules that are now applicable came into effect from July 23, 2024. The rules stipulate that LTCG (long-term capital gains) on gold ETFs, metallic gold and mutual funds are taxed at a flat rate of 12.5%. Earlier one used to get indexation benefits but it will no longer be applicable now. SGB, or Sovereign Gold Bonds, have been discontinued by the Centre. If pone wants to sale them before maturity, one has to pay LTCG at the rate of 12.5%.
Tax on selling gold
If one buys gold, one has to pay 3% GST on the value of gold and 5% GST on the making charge (if it is in the form of jewellery). But if youo sell gold, you may have to pay income tax. Indexation benefits are no longer available on the sale of gold and the rule came into effect on July 23, 2024. If one has held the gold for 24 months or a shorter time period, STCG will be levied. It is charged at the slab rate of the seller's income. But if the metal is held for more than 24 months, LTCG become applicable and it is applicable at the rate of 12.5%. Again, no indexation benefit for the seller.
Tax on ETF/gold mutual fund gains
Gold ETFs (exchange-traded funds) are a modern dematerialised way of investing in gold which has no traditional hassles of safe-keep or worries about the quality of the metal bought. Either an individual can invest in gold ETFs or gold mutual funds can invest in gold ETFs. If the holding period of gold ETFs or gold mutual funds is less than or equal to 12 months, one has to pay STCG on the gains. But should the holding period exceed 12 months, LTCG will be applicable on the gains. And without any indexation benefit.
Tax on gains on SGB
SGBs or Sovereign Gold Bonds are securities issued by the RBI on behalf of the Centre. It has now been discontinued by the government due to the surging prices of the metal. The bonds have a maturity period of eight years. Those who invest also get an interest of 2.5% on the amount invested. They also profit from the appreciation in the price of the metal. The rules state that if one holds the SGBs till maturity there is not income tax on the gains. But if the bond is sold through the secondary market, STCG or LTCG is applicable depending upon the period of holding. For less than or equal to 12 months of holding, STCG will be effective. But if the bonds are held for more than 12 months, the tax will be levied at 12.5% without any indexation benefit.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds and crypto assets.)
