Useful information: Invest in gold this Dhanteras; Jewellery, ETFs or digital gold... which attracts how much tax?

Gold Investment 2025: Every year, before Dhanteras and Diwali, the trend of buying gold gains momentum in India. People consider it not only a tradition but also an auspicious investment. But now that many forms of gold—such as jewelry, gold ETFs, digital gold, or Sovereign Gold Bonds (SGBs)—are available in the market, it's natural to question which form is most profitable and where the tax burden is higher. Certified Financial Planner Taresh Bhatia explains what's in store for you if you're considering investing in gold this Dhanteras.

Why is gold the most reliable investment?

Gold is a vital component of Indian investment portfolios. It doesn't fluctuate like the stock market, nor does it lose value due to inflation. In India, gold has been seen as a 'safe asset' for centuries—it has protected families' wealth even during times of war, recession, or rupee depreciation. In other words, gold is insurance for your wealth. It doesn't pay interest, but it definitely comes in handy during difficult times.

Key ways to invest in gold and tax rules

Today, there are many modern ways to invest in gold. Each format has a different tax treatment. Let's explore these:

1. Physical Gold (Jewelry, Coins, Bars)
This is the most traditional method, where people purchase physical jewelry or gold bars. A 3% GST is levied on the purchase. If a making charge is included in the bill, an additional 5% GST is payable. However, if you sell the gold within three years, the profit is considered Short-Term Capital Gain (STCG) and is taxable according to your income tax slab. If you sell it after more than three years, it is considered Long-Term Capital Gain (LTCG), which is taxed at 12.5% (without indexation) – this is a new rule effective from 2024.

Note that not every piece of jewelry is required to be listed on your income tax return, but if your income exceeds ₹50 lakh, you must include gold among your major assets.

2. Digital Gold

Digital gold is now available on fintech apps like PhonePe, Google Pay, Paytm, etc. You can start with as little as ₹10 or 0.1 grams. This is an easy and secure method for small investors, and there's no fear of theft. Digital gold is treated the same as physical gold, and if it generates a profit within three years, STCG will be applicable. However, if it's sold after three years, a 12.5% LTCG tax will be applicable. A 3% GST is payable at the time of purchase.

However, digital gold is not regulated by the RBI or SEBI, so caution is necessary.

3. Gold ETF (Exchange Traded Fund)
Gold ETFs are funds listed on stock exchanges that invest in physical gold. A demat account is required. ETFs offer good liquidity, no risk of theft, and no management charges.

Profits made before 12 months when selling an ETF are subject to STCG (taxed according to your tax slab). LTCG (12.5%) is taxed after 12 months. No GST is levied on this, as you are not buying gold directly.

4. Gold Mutual Funds / Fund of Funds (FoFs)
If you don't have a demat account, you can invest through gold mutual funds. These invest indirectly in gold ETFs. Similar to ETFs, STCG is levied on sales before 12 months, and LTCG is 12.5% tax on sales after 12 months. There are no making charges or GST.

How is tax levied on selling gold?

Suppose you bought gold worth ₹2 lakh in 2022 and sold it for ₹2.5 lakh in 2025 – the profit is ₹50,000. If it's been less than 3 years, the ₹50,000 will be added to your taxable income. However, if it's been more than 3 years, the ₹50,000 will be subject to 12.5% LTCG tax.

What are the tax rules on inherited gold?
If you inherited gold or received it as a gift, no tax is levied at that time. Tax on it is levied only when you sell it, and the original owner's holding period will also be considered.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.