Gold and silver income tax rule change: How will your precious metal investments including SGBs be taxed after Budget 2026?

Finance Minister Nirmala Sitharaman in her Budget 2026 speech in Parliament today (February 1, Sunday), made an important change in the taxation of Sovereign Gold Bond (SGB) where exemption from capital gains tax from gold bond investments will be available only where such bonds are subscribed to by an individual at the time of issue and are held till maturity.

The Finance Minister also said that this SGB exemption applies uniformly to all issuances of Sovereign Gold Bonds (SGBs) by the Reserve Bank of India (RBI).

Apart from that, there was no change in the taxation process of physical and digital gold, and gold exchange-traded funds (ETFs) and mutual funds.


With a change in the SGB taxation process, here are the latest taxation rules for different types of gold and silver investments. (As per Hitesh Jain, partner, direct tax, NA Shah Associates LLP).

Tax rules for physical gold (jewellery, bars and coins)

A 3% Goods and Services Tax (GST) is applied when purchasing physical gold and an extra 5% GST is applied on making charges.

If the holding period of physical gold is up to 24 months, Short-term Capital Gains (STCG) tax is applied at slab rates. If the holding period is beyond 24 months, Long-term Capital Gains (LTCG) tax is applied at 12.5% rate without indexation benefits.

Digital gold and silver taxation rules

Taxation on digital gold and silver will be same as on physical gold, except a 5% GST won’t be applied at making charges because of its digital form.

Gold and silver ETF taxation rules

If the holding period of gold and silver ETFs is up to 12 months, gains will be taxed at slab rates. However, if the holding period is more than 12 months, a 12.5% tax will be applied without taxation. For tax purposes, gold and silver ETFs are treated as listed securities.

Gold and silver mutual fund taxation rules

Gold and silver mutual funds mainly invest in gold and silver ETFs. If the holding period of a gold or a silver mutual fund is up to 24 months, gains will be taxed at slab rates. If the holding period is more than 24 months, gains from them will be taxed at 12.5% without indexation.

Gold and silver tax table as per CA Hitesh Jain, Partner - Direct Tax, NA Shah Associates LLP.

Investment type	GST at purchase	Interest income tax	Short-term capital gains (STCG)	Long-term capital gains (LTCG)	Notes
Sovereign Gold Bonds (SGBs)	Not applicable	2.5% annual interest taxed at slab rate	If sold within 12 months: taxed at slab rate	If held beyond 12 months and sold before maturity: 12.5% without indexation; Nil if held till 8-year maturity	Capital gains exemption does not apply if bought from secondary market
Gold ETFs	Not applicable	Not applicable	Up to 12 months: taxed at slab rate	Beyond 12 months: 12.5% without indexation	Treated as listed securities
Silver ETFs	Not applicable	Not applicable	Up to 12 months: taxed at slab rate	Beyond 12 months: 12.5% without indexation	Treated as listed securities
Gold mutual funds	Not applicable	Not applicable	Up to 24 months: taxed at slab rate	Beyond 24 months: 12.5%	Usually invest in gold ETFs
Silver mutual funds	Not applicable	Not applicable	Up to 24 months: taxed at slab rate	Beyond 24 months: 12.5%	Usually invest in silver ETFs
Physical gold and silver	3% GST on value; jewellery making charges attract extra 5% GST	Not applicable	Up to 24 months: taxed at slab rate	Beyond 24 months: 12.5% without indexation	GST paid cannot be set off against capital gains tax
Digital gold and silver	3% GST	Not applicable	Up to 24 months: taxed at slab rate	Beyond 24 months: 12.5% without indexation	Tax treatment similar to physical metals
Gifted gold or silver	Not applicable	Not applicable	Taxable only if gift from non-relatives exceeds ₹50,000	Taxable in the recipient’s hands	Gifts from specified relatives are tax-free
Inherited gold or silver	Not applicable	Not applicable	Capital gains apply on sale	Capital gains apply on sale	Original owner’s cost and holding period are considered

Sovereign Gold Bond taxation rules

• The interest of 2.5% on the SGB investment amount is taxed at slab rates.
• If SGBs are sold within 12 months, gains are taxed at slab rates.
• If they are sold after 12 months and before the maturity period of eight years, gains are taxed at 12.5% without indexation.
• Presently, if SBG are hold up to the maturity period, there is no tax on gains. This capital gain exemption is available even if SGB are purchased from market. As per Budget 2026, the capital gain exemption is available only to original subscriber who hold up to the maturity period.
• Capital gains exemption at maturity applies even if bought from the secondary market.

Tax on gifted gold or silver

Gold and silver received as gifts from specified relatives — such as parents, spouse or siblings — are not taxed at the time of receipt. Gifts from non-relatives exceeding Rs 50,000 in value are taxable in the recipient’s hands.

Tax on inherited gold or silver

In the case of inheritance, there is no inheritance tax in India. When inherited gold or silver is sold, capital gains are calculated using the original owner’s purchase cost, and the holding period includes the period for which the asset was held by the previous owner.