A simple and updated guide to taxation of gold and silver in India in 2026 covering physical, digital, ETF, mutual funds and SGB.
When we invest in gold or silver, we usually look at prices, returns, and safety. But there is one thing that silently affects our returns and is often ignored — tax. Understanding the Taxation of Gold and Silver in India in 2026 is extremely important because the rules have changed in recent years and many older articles online are outdated.
In this article, I will explain in simple language, as if explaining to a child:
- how gold and silver are taxed in 2026,
- what has changed recently,
- which form is more tax-efficient, and
- what mistakes you should avoid.
Taxation of Gold and Silver in India in 2026
1. Different ways to invest in gold and silver
You can invest in gold and silver in many forms today.
Gold:
- Physical gold (coins, bars, jewellery)
- Digital gold
- Gold ETFs
- Gold mutual funds / FoF
- Sovereign Gold Bonds (SGB)
- Gold futures
Silver:
- Physical silver (coins, bars, jewellery)
- Digital silver
- Silver ETFs
- Silver mutual funds / FoF
- Silver futures
Each of these is taxed differently.
2. GST on purchase
Whenever you buy physical or digital gold and silver, GST applies.
| Form | GST |
| Physical gold/silver | 3% |
| Jewellery | 3% on metal + 5% on making |
| Digital gold/silver | 3% |
| ETF / MF / SGB / Futures | Nil |
So physical and digital forms have a higher upfront cost because of GST.
3. Capital gains — basic idea
Tax is paid when you sell gold or silver and make a profit.
Three factors matter:
- How long you held it
- What type of instrument it is
- Listed or unlisted
Holding period rules:
| Instrument | STCG | LTCG |
| Physical/Digital gold & silver – Unlisted | Less than or equal to 24 months | More than 24 months |
| Gold/Silver ETF – Listed | Less than or equal to 12 months | More than 12 months |
| Gold/Silver MF (FoF) – Unlisted | Less than or equal to 24 months | More than 24 months |
| SGB – Listed | Less than or equal to 12 months | More than 12 months |
You noticed that for the listed instruments, the holding period to arrive at LTCG or STCG is 12 months. But for unlisted instruments, it is 24 months.
4. Tax rates in 2026
Physical & Digital Gold and Silver
- STCG – taxed as per your income slab.
- LTCG – taxed at 12.5% without indexation.
Gold & Silver ETFs
- STCG – slab rate.
- LTCG – taxed at 12.5% without indexation.
Gold & Silver Mutual Funds / FoF
- STCG – slab rate.
- LTCG – 12.5% without indexation.
Sovereign Gold Bonds (SGB)
- Sold on exchange – STCG slab / LTCG 12.5%.
- Redeemed with RBI at maturity – Fully tax-free capital gain.
- Yearly interest of 2.5% is taxable as per your slab rate
Futures
- Treated as business income.
- Taxed at slab rates.
5. Summary table
| Instrument | GST | STCG if Sold Within | LTCG if Sold After | STCG Tax | LTCG Tax | Indexation | Notes |
|---|---|---|---|---|---|---|---|
| Physical Gold / Silver | 3% | 24 months | More than 24 months | Slab | 12.5% | No | Includes coins, bars |
| Jewellery (Gold / Silver) | 3% + 5% on making charges | 24 months | More than 24 months | Slab | 12.5% | No | Making charges extra |
| Digital Gold / Silver | 3% | 24 months | More than 24 months | Slab | 12.5% | No | Same as physical |
| Gold / Silver ETF | No | 12 months | More than 12 months | Slab | Slab | No | Listed security |
| Gold / Silver Mutual Fund (FoF) | No | 24 months | More than 24 months | Slab | 12.5% | No | Non-equity MF |
| SGB (sold on exchange) | No | 12 months | More than 12 months | Slab | 12.5% | No | Market sale |
| SGB (held till maturity) | No | — | — | — | Exempt | — | Only true tax-free gold |
| Gold / Silver Futures | No | — | — | Slab (business income) | — | No | Trading income |
6. Simple examples
Example 1 — Physical gold
You buy gold for Rs.5 lakh and sell after 1 year for Rs.7 lakh.
Profit = Rs.2 lakh – Tax = taxed as per your tax slab.
Example 2 — Gold ETF
Same numbers but through ETF. You will be taxed at 12.5%
Tax = 12.5% of Rs.2 lakh = Rs.25,000.
Example 3 — SGB
Buy at Rs.5 lakh, redeem at maturity for Rs.8 lakh.
Profit = Rs.3 lakh – Tax = Rs.0.
Considering all these, SGBs are the best option for Gold. However, as no new issues are available, you must explore the existing SGBs through the secondary market. The next best options are ETFs, Mutual Funds, and Fund Of Funds. Exploring Gold and Silver in physical form is not a better way (in terms of tax, safekeeping, and if you look into the purity, making charges, and wastage).
