Income Tax Impact on Sale of Gold and Silver in India (FY 2025–26 Complete Guide)
Gold and silver have traditionally been considered safe-haven investments in India — held in the form of: Jewellery Coins & bars Digital gold ETFs / Sovereign Gold Bonds (SGBs) However, many taxpayers are unaware of the exact income tax impact ...
Gold and silver have traditionally been considered safe-haven investments in India — held in the form of:
Jewellery
Coins & bars
Digital gold
ETFs / Sovereign Gold Bonds (SGBs)
However, many taxpayers are unaware of the exact income tax impact when gold or silver is sold.
Wrong assumptions often lead to:
Under-reporting of capital gains
Excess tax payment
Income tax notices due to AIS mismatch
This WonderTax guide explains everything you need to know about the income tax impact on sale of gold and silver, with practical examples and tax-planning insights for FY 2025–26 / AY 2026–27.
Is Sale of Gold and Silver Taxable in India?
✅ Yes.
Any profit arising from the sale of gold or silver is treated as Capital Gains under the Income Tax Act, 1961.
This applies to:
Physical gold & silver (jewellery, coins, bars)
Digital gold
Gold ETFs
Silver ETFs
Capital Gains Classification for Gold & Silver
The tax treatment depends on the holding period.
Holding Period Rules (FY 2025–26)
| Asset | Short-Term | Long-Term |
| Gold / Silver (physical or digital) | ≤ 36 months | > 36 months |
Short-Term Capital Gains (STCG) on Gold & Silver
If gold or silver is sold within 36 months from the date of purchase:
Gain = Short-Term Capital Gain
Taxed as per applicable income tax slab rate
No indexation benefit allowed
Example – STCG
Purchase price: ₹3,00,000
Sale price (after 2 years): ₹3,80,000
STCG: ₹80,000
👉 ₹80,000 added to total income and taxed as per slab.
Long-Term Capital Gains (LTCG) on Gold & Silver
If gold or silver is sold after 36 months:
Gain = Long-Term Capital Gain
Taxed at 20% with indexation
Surcharge and cess apply
Indexation Benefit Using Cost Inflation Index (CII)
Indexation adjusts the purchase cost for inflation, significantly reducing taxable gains.
Example – LTCG with Indexation
Purchase year: FY 2018–19 (CII = 280)
Sale year: FY 2024–25 (CII = 363)
Purchase cost: ₹2,00,000
Indexed cost =
₹2,00,000 × 363 / 280 = ₹2,59,286
If sale value = ₹3,50,000
👉 Taxable LTCG = ₹90,714
Income Tax on Sale of Gold Jewellery
Gold jewellery is taxed exactly the same way as gold coins or bars.
Important points:
Making charges are part of purchase cost
Inherited jewellery follows original owner’s holding period and cost
If purchased before 1 April 2001, FMV as on 1 April 2001 can be taken
Income Tax on Sale of Inherited Gold or Silver
If you sell inherited gold/silver:
Holding period = from date of purchase by original owner
Cost = original purchase cost (or FMV as on 1 April 2001)
Indexation applies from original purchase year
This often converts STCG into LTCG, reducing tax drastically.
Exemption Options on LTCG from Gold & Silver
Section 54F (Limited Cases)
Applicable only if:
Entire sale proceeds are invested in a residential house
You do not own more than one house (excluding new house)
⚠️ Not commonly practical for gold sales.
Section 54EC – Capital Gain Bonds
You can invest LTCG from gold/silver into:
NHAI bonds
REC bonds
Conditions:
Maximum investment: ₹50 lakh
Lock-in: 5 years
👉 This is the most practical exemption route for gold LTCG.
TDS on Sale of Gold & Silver
When Sold to Jeweller / Trader
No standard TDS on individual selling gold
PAN may be required for high-value transactions
When Purchased by Business in Cash
Cash transactions may trigger scrutiny
High-value sales appear in AIS
Reporting Sale of Gold & Silver in ITR
Must be reported under Schedule CG
Choose correct ITR form:
- ITR-2 (most individuals)
Match transaction with AIS
Failure to report often leads to:
143(1) adjustment
Clarification notice
Common Mistakes While Reporting Gold & Silver Sales
❌ Assuming jewellery sale is tax-free
❌ Ignoring inherited asset rules
❌ Not applying indexation
❌ Missing Schedule CG reporting
❌ Ignoring AIS mismatch
FAQs (Schema-Ready)
Is sale of gold jewellery taxable in India?
Yes, capital gains tax applies.
Is gold received as gift taxable on sale?
Gift itself may be exempt, but sale triggers capital gains tax.
Is silver taxed differently from gold?
No, both follow identical capital gains rules.
Is indexation available on digital gold?
Yes, if held for more than 36 months.
Conclusion
Gold and silver sales are fully taxable transactions under Indian income tax laws.
However, with:
Correct classification
Indexation benefit
Proper exemption planning
…the tax impact can be legally minimised.
CTA – WonderTax
👉 Planning to sell gold, silver or inherited jewellery?
WonderTax helps with:
Capital gains computation
Indexation & exemption planning
ITR filing & Schedule CG reporting
Notice handling for AIS mismatches
