Gold and Silver Tax Guide 2026: How Your Capital Gains Are Taxed
Investing in gold and silver has been very profitable recently. In 2025, gold and silver saw returns of 75% and 167%, respectively. This growth has continued into 2026, driven by global tensions and economic shifts.
If you sold precious metals this year, you likely made a profit. These profits are subject to Capital Gains Tax. The amount you pay depends on how you held the investment whether as physical metal, an ETF, or a bond and how long you held it.
1. Gold and Silver ETFs
Exchange-Traded Funds (ETFs) are treated as listed securities for tax purposes.
- Short-Term Capital Gains (STCG): If you hold the ETF for 12 months or less, the profit is added to your total income and taxed according to your income tax slab.
- Long-Term Capital Gains (LTCG): If you hold it for more than 12 months, the profit is taxed at a flat rate of 12.5% without indexation benefits.
- Intraday Trading: If you buy and sell on the same day, the profit is treated as “speculative business income” and taxed at your income slab rate.
Note: Unlike equity funds, gold and silver ETFs do not qualify for the Rs 1.25 lakh LTCG exemption.
2. Gold and Silver Fund of Funds (FoF)
Mutual funds that invest in gold or silver ETFs follow a different timeline.
- Short-Term: Held for 24 months or less. Taxed at your regular income tax slab.
- Long-Term: Held for more than 24 months. Taxed at a flat 12.5% without indexation.
3. Sovereign Gold Bonds (SGB)
The tax rules for SGBs changed in Budget 2026.
- Interest: The 2.5% annual interest remains taxable as “Income from Other Sources” at your slab rate.
- Redemption at Maturity (8 Years): * Original Subscribers: Capital gains remain fully tax exempt if you bought the bonds directly from the RBI and held them until maturity.
- Secondary Market Buyers: If you bought SGBs from the stock exchange, your gains at maturity are now taxable as LTCG at 12.5%.
- Early Exit: If you sell on the exchange before maturity, the 12-month (STCG) and 12-month (LTCG at 12.5%) rules apply.
4. Physical Gold and Silver
This includes jewelry, coins, and bars.
- Short Term: Held for 24 months or less. Taxed at your income tax slab.
- Long Term: Held for more than 24 months. Taxed at 12.5% without indexation.
- Important: You cannot use the 3% GST paid at the time of purchase to reduce your tax liability.
How to Handle Capital Losses
If you sold at a loss, you can use it to lower your taxes:
- Short Term Capital Loss (STCL): Can be balanced against both short-term and long-term gains.
- Long Term Capital Loss (LTCL): Can only be balanced against long-term gains.
- Carry Forward: If you can’t offset the full loss this year, you can carry it forward for up to 8 years, provided you file your tax return (ITR) on time.
Summary Table: 2026 Tax Rates
| Investment Type | STCG Period | STCG Tax Rate | LTCG Period | LTCG Tax Rate |
| ETFs | ≤ 12 Months | Income Slab | > 12 Months | 12.5% |
| Physical Gold/Silver | ≤ 24 Months | Income Slab | > 24 Months | 12.5% |
| Mutual Funds (FoF) | ≤ 24 Months | Income Slab | > 24 Months | 12.5% |
| SGB (Secondary) | ≤ 12 Months | Income Slab | > 12 Months | 12.5% |
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