How gold and silver are taxed post-Budget 2026

How gold and silver are taxed post-Budget 2026

• Budget 2026 restricts SGB capital gains exemption to original subscribers only
• New SGB tax rules take effect April 1, 2026; secondary buyers lose exemption
• Physical and digital gold LTCG taxed at 12.5 percent; indexation benefit removed

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Finance Minister Nirmala Sitharaman presented the Union Budget 2026 on February 1, bringing renewed focus to how profits from gold are taxed. While many investors assume that selling precious metals is tax-simple, the reality is far more layered. Gold and silver are not taxed as a single asset class; the tax outcome depends on how the metal is held, how long it is owned, and how it is sold or redeemed.

With Budget 2026 tightening the tax treatment of Sovereign Gold Bonds (SGBs), investors now need to reassess their gold strategies more carefully than before. Here’s how gold and silver are taxed after Budget 2026.

What announcement did FM make?

“It is proposed to provide that the exemption from capital gains tax in respect of Sovereign Gold Bonds shall be available only where such bonds are subscribed to by an individual at the time of original issue and are held continuously until redemption on maturity,” FM said in Budget speech.

“The FM’s proposal for restricting capital gain exemption on SGBs to original individual subscribers, who hold the bonds continuously until maturity, reinforces the policy intent of SGBs as a sovereign-backed savings instrument rather than a tax-efficient trading asset,” said Kunal Savani, Partner, Cyril Amarchand Mangaldas.

“Under the previous regime, anyone holding an SGB until maturity enjoyed a tax-free exit on capital gains, regardless of where they bought it. Budget 2026 changes this fundamentally; the capital gains tax exemption at redemption is now only available to the original subscriber,” said Ankit Jain, Partner, Ved Jain & Associates.

How SGB is taxed post Budget 2026?

The 2.5 percent annual interest earned on Sovereign Gold Bonds (SGBs) continues to be taxed as per the investor’s applicable income-tax slab. If SGBs are sold within 12 months of purchase, the gains are treated as short-term capital gains and taxed at slab rates. For bonds sold after 12 months but before the eight-year maturity, long-term capital gains are taxed at 12.5 percent without indexation.

As proposed in Budget 2026, the capital gains exemption at maturity will be available only to original subscribers, which indicates investors who buy SGBs from the secondary market will no longer qualify for the exemption.

The new SGB taxation rules announced in Budget 2026 are scheduled to take effect from April 1, 2026.

How physical gold and silver are taxed

Physical gold and silver, such as jewellery, coins, and bars, are treated as capital assets.

∙ LTCG (Held > 24 months): 12.5 percent + cess/surcharge (Indexation benefit is removed).

∙ STCG (Held ≤ 24 months): Added to total income and taxed at your applicable Income Tax Slab Rate.

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

Digital gold and silver taxation

Digital gold and silver are taxed on the same lines as physical gold and silver. The only difference is that the 5 percent GST typically levied on making charges does not apply, since digital assets do not involve any physical fabrication.

How gold ETFs taxed

Gold and silver ETFs are treated as listed securities for tax purposes. Gains from units held for up to 12 months are taxed at the investor’s applicable income tax slab rate, while holdings beyond 12 months attract a long-term capital gains tax of 12.5 percent without indexation benefits.

Gold & Silver Mutual Funds

∙ LTCG (Held > 24 months): 12.5 percent (No indexation).

∙ STCG (Held ≤ 24 months): Taxed at your Income Tax Slab Rate.

Tax on inherited gold or silver

There is no inheritance tax in India on gold or silver received through succession. However, when the inherited asset is sold, capital gains are computed based on the original purchase cost incurred by the previous owner, and the holding period is counted from the date the asset was first acquired by them.

In case the gold was obtained prior to April 1, 2001, then the fair market value as of that day may be adopted.

What investors should keep in mind?

Match the gold product to your investment horizon, not just expected returns.

Do not assume tax exemptions apply across all formats of gold.

Re-evaluate SGB purchases from the secondary market.

Always factor in post-tax returns before booking profits.