Gold and Silver Tax Guide: What Investors Need to Know After Budget 2026
Budget 2026 has introduced a major change for Sovereign Gold Bond (SGB) investors while keeping most other precious metal tax rules the same. With prices fluctuating, many investors are wondering whether to buy, hold, or sell.
How your profits are taxed depends on the type of gold or silver you own and how long you have held it. Here is a clear breakdown of the new rules.
Important Update for Sovereign Gold Bonds (SGB)
The biggest announcement in the 2026 Budget affects SGBs. Finance Minister Nirmala Sitharaman proposed a rule that narrows who can enjoy tax-free gains.
- Original Subscribers: If you bought your bonds directly from the RBI during the initial offer and hold them until they mature (8 years), your capital gains remain 100% tax-free.
- Secondary Market Buyers: Starting April 1, 2026, if you buy SGBs from the stock exchange (second-hand), you will no longer get the tax exemption at maturity. Your gains will be taxed as capital gains.
- Annual Interest: The 2.5% interest you earn every year is still taxed according to your regular income tax bracket.
- Selling Before Maturity:
- Held up to 12 months: Profits are taxed at your regular income tax rate (STCG).
- Held more than 12 months: Profits are taxed at a flat 12.5% without indexation benefits (LTCG).
Tax on Physical Gold and Silver
Physical assets include jewelry, coins, and bars. These are considered capital assets, and the tax depends on your holding period:
- Short-Term (Held up to 24 months): Profits are added to your income and taxed at your slab rate.
- Long-Term (Held over 24 months): Profits are taxed at 12.5% without indexation.
- GST: You must pay 3% GST on the value of the metal and 5% GST on the making charges when you buy.
Digital Gold and Silver
Digital gold is taxed almost exactly like physical gold. The only difference is that you do not pay the 5% GST on making charges since there is no physical manufacturing involved at the time of purchase.
Gold and Silver ETFs
For tax purposes, ETFs are treated like listed securities:
- Short-Term (Held up to 12 months): Profits are taxed at your regular income tax slab.
- Long-Term (Held over 12 months): Profits are taxed at 12.5% without indexation.
Gold and Silver Mutual Funds
Mutual funds typically invest in ETFs, but their tax holding period is different:
- Short-Term (Held up to 24 months): Profits are taxed at your income tax slab.
- Long-Term (Held over 24 months): Profits are taxed at 12.5% without indexation.
Taxation on Inherited Precious Metals
India does not have an inheritance tax, so receiving gold or silver from a family member is tax-free. However, when you decide to sell that inherited metal:
- Cost: The “purchase price” is considered what the original owner paid for it.
- Holding Period: The time the previous owner held the asset is added to your own holding period to determine if it is a short-term or long-term gain.
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