Gold is far more than a piece of jewellery in India; it signifies a metaphor of trust, celebration, and prudent saving. Whether it's a few bangles acquired during wedding season, as gold coins and gold bars, or now even as new-age digital gold, gold remains a prominent choice for most households.

Although purchasing or selling gold seems straight forward in reality, the tax rules behind this transaction may get a little complicated if you aren't thinking ahead. Between GST taxes, capital gains taxes, and laws regulating how much gold you can legally own, you should be aware of the rules in order to make better financial decisions. If you're planning an investment in gold, this is everything you need to know about taxes before you step into the gold market.

GST on Buying Gold in India

Let's start with the basics. Whenever you buy gold in any form, be it jewellery, gold coins and gold bars, or even through a digital gold platform, you're liable to pay Goods and Services Tax (GST).

Here's how GST works:

• 3% GST is charged on the value of gold.

• If you're purchasing gold jewellery, an additional 5% GST is levied on the making charges (if charged separately).

So, for example, if you're buying gold worth ₹50,000 and the making charge is ₹5,000, you'll pay:

• ₹1,500 (3% of ₹50,000) as GST on gold.

• ₹250 (5% of ₹5,000) as GST on making charges.

In total, your tax outgo would be ₹1,750 on that purchase.

Income Tax on Selling Gold: Capital Gains

Selling gold, whether it's jewellery or gold coins and bars, could mean paying tax under the capital gains category. It depends on how long you've held the gold before selling.

1. Short-Term Capital Gains (STCG) If you sell gold within 3 years of purchase, any profit is added to your total income and taxed as per your income tax slab.

Let's say you bought gold for ₹2 lakhs and sold it for ₹2.5 lakhs within a year. That ₹50,000 profit will be added to your income and taxed accordingly.

2. Long-Term Capital Gains (LTCG) If you sell gold after 3 years, the gain is considered long-term and taxed at 20% with indexation.

Indexation adjusts your purchase price for inflation, reducing your taxable profit. This is beneficial if gold prices have risen over time.

Tax on Inherited Gold One of the common questions is: Do I have to pay tax on inherited gold? The answer is no, not when you inherit it.

However, if you later decide to sell the inherited gold, then capital gains tax will apply. For such cases, the original purchase date (of the person you inherited it from) is considered to calculate whether it's short-term or long-term capital gains.

So, if your grandmother bought gold in 1990 and you sell it in 2025, it will be treated as a long-term capital gain.

Declaring Gold in Income Tax Returns

While there is no compulsion to declare your gold holdings in your Income Tax Return (ITR), it's a good idea to maintain proper records. Especially when you've made a large investment in gold, it's wise to:

• Keep invoices or receipts from jewellers or dealers.

• Maintain transaction records for digital gold purchases.

• Declare the capital gains when you sell gold and make a profit.

Being transparent with your gold transactions helps avoid any scrutiny from tax authorities.

How Much Gold Can You Legally Hold?

The Income Tax Department allows individuals to hold gold without attracting questions—provided it's from known and explained sources of income or inheritance. Here's what's generally accepted during a search (e.g., by tax officers):

• Married women: Up to 500 grams

• Unmarried women: Up to 250 grams

• Men: Up to 100 grams

If you hold more than these limits, it's not illegal, but you should be able to justify the source, such as inheritance or disclosed income.

TDS on Gold Purchases

As per recent income tax provisions:

• If your gold purchase exceeds ₹10 lakhs in a financial year, and you're paying in cash, the seller might deduct TDS (Tax Deducted at Source) under certain sections of the Income Tax Act.

• For purchases via bank transfer or online, PAN card details may be mandatory for verification.

Selling Gold: PAN Requirements and Tracking

If you sell gold and the transaction exceeds ₹2 lakhs, providing your PAN card is mandatory. This helps the government keep track of large-scale gold and sale transactions to avoid tax evasion.

Investment in Digital Gold: Tax Rules Digital gold, a modern and convenient way to invest, is also treated like physical gold when it comes to taxes:

• GST applies at the time of purchase.

• Capital gains tax applies at the time of sale, depending on your holding period.

• Keep track of all your transactions in a safe and verifiable format.

Gold is not just an emotional asset in India, it's a serious financial one too. And just like with other investments, it's essential to understand the tax implications when you buy gold, hold it, or sell it. Whether you invest in jewellery, gold coins and bars, or even digital gold, staying aware of GST, capital gains, and income tax rules can help you make informed and legal financial decisions.