Gold Tax in India: GST, Import Duty & Capital Gains

When you buy gold jewellery in India, GST is charged at 3% on the value of the gold and 5% on the making charges. The two rates apply to different parts of the bill, so the total GST depends on how much of the price is gold and how much is making. For a plain bar or coin with minimal making charges, the GST is close to 3% of the total; for an intricate bridal set, the 5% on making charges adds more.

GST is charged by the jeweller and shown on the invoice. There is no way to avoid it legally, and a jeweller offering to skip GST is offering to break the law — and leaving you without a proper invoice, which you need for resale.

India imports almost all of its gold, and the government charges customs duty on it — reduced from 15% to 6% in the July 2024 budget. You do not pay this duty separately: it is already reflected in the IBJA rate, which is why Indian gold costs more than the international spot price converted to rupees.

The duty cut in 2024 narrowed the gap between Indian and international gold prices significantly. It also reduced the incentive for gold smuggling, which had grown while the duty was 15%. The duty rate is set in the budget and can change — watch the annual budget for updates.

When you sell gold at a profit, the gain is taxable. Under the rules changed in July 2024, gold held for more than 24 months qualifies for long-term treatment at 12.5% without indexation; gold held for 24 months or less is taxed at your income-tax slab rate. (Before July 2024, the holding period was 36 months and the rate was 20% with indexation — the new rules are simpler but remove the indexation benefit.)

Keep your purchase invoices: without them, you cannot prove your cost, and the tax department may treat the entire sale value as a gain. Inherited gold is taxed on the gain from the original purchase price (or the value when inherited, depending on the circumstances) — get professional advice for large inherited holdings.

There is one way to own gold in India without capital gains tax: Sovereign Gold Bonds. If you hold SGBs to maturity (eight years), the capital gain on the gold price is completely tax-free — and you earn 2.5% annual interest on top. The interest itself is taxable as income, but the gain is not.

That makes SGBs the most tax-efficient gold investment in India by a wide margin, and the main reason to consider them before buying physical gold for investment. The trade-off is the eight-year lock-in (with exit after five years).

For jewellery buyers, the taxes to budget for are GST (3% on gold, 5% on making) and the import duty already in the rate. For investors, the taxes to plan for are capital gains on sale — and the SGB exemption that avoids them. For everyone, the discipline is the same: keep invoices, know the rates, and never let a jeweller talk you into skipping the paperwork.

Tax rules change with every budget. The rates in this guide are current as of the July 2024 changes; check the latest budget announcements before a large purchase or sale.