In this guide
If you sold gold or silver during FY 2025-26, the tax treatment for AY 2026-27 depends heavily on how you owned the asset.
Physical jewellery, gold/silver ETFs, mutual fund units and Sovereign Gold Bonds do not always follow the same holding-period rules. The major capital-gains changes introduced from 23 July 2024 also mean that many older articles mentioning 20% tax with indexation are no longer appropriate for these transactions.
AY 2026-27 continues to be filed under the Income-tax Act, 1961, because it relates to income earned before 1 April 2026.
Gold and Silver Tax Rates for AY 2026-27
| Investment | Long-term after | STCG tax | LTCG tax |
|---|---|---|---|
| Listed Gold/Silver ETF | More than 12 months | Normal applicable rate | 12.5% without indexation |
| Physical gold/silver | More than 24 months | Normal applicable rate | 12.5% without indexation |
| Unlisted Gold/Silver MF units* | More than 24 months | Normal applicable rate | 12.5% without indexation |
| SGB sold on stock exchange | More than 12 months | Normal applicable rate | 12.5% without indexation |
| SGB redeemed by individual | — | — | Capital gain exempt |
*Subject to Section 50AA classification discussed below.
The Income Tax Department’s current capital-gains guidance confirms that, for transfers on or after 23 July 2024, listed securities/units generally use a 12-month threshold, while unlisted units and other capital assets generally use 24 months. General LTCG is taxed at 12.5% without indexation.
1. Gold and Silver ETF Taxation
Gold and silver ETFs traded on a recognised stock exchange are listed units.
If sold:
- Within 12 months: gain is generally short-term.
- After more than 12 months: gain is generally long-term.
Short-term gains are taxed at the taxpayer’s normal applicable rates, while qualifying long-term gains are generally taxed at 12.5% without indexation.
Unlike equity-oriented mutual funds, gold and silver ETFs do not get the ₹1.25 lakh Section 112A LTCG threshold merely because they are exchange-traded. That benefit relates to qualifying equity-oriented assets.
For capital-gains return filing:
2. Physical Gold, Jewellery, Coins and Silver
Physical gold and silver—including jewellery, coins and bars held as investments—generally require a 24-month holding period to become long-term assets under the post-23 July 2024 framework. Jewellery is specifically excluded from the normal “personal effects” exclusion, so selling personal jewellery can still result in capital gains.
Accordingly:
Held for 24 months or less: STCG taxed at applicable rates.
Held for more than 24 months: LTCG generally taxed at 12.5% without indexation.
The gain is broadly calculated after considering sale consideration, allowable transfer expenditure and acquisition cost.
3. Gold Mutual Funds: Important AY 2026-27 Change
This area requires special care because of Section 50AA.
Until AY 2025-26, Section 50AA’s definition of a specified mutual fund was broad enough to cover many non-equity funds. From AY 2026-27, however, the definition has been narrowed principally to mutual funds investing more than 65% in debt and money-market instruments, and certain fund-of-funds investing in such debt funds.
Therefore, an ordinary gold mutual fund that does not meet this debt-heavy definition is generally no longer automatically deemed short-term merely because of Section 50AA.
For an unlisted non-equity unit outside Section 50AA, the current holding-period framework generally uses:
- Up to 24 months: STCG;
- More than 24 months: LTCG at 12.5% without indexation.
The actual scheme portfolio should nevertheless be checked before applying this treatment.
4. Sovereign Gold Bonds: Redemption vs Sale Is Critical
SGB taxation has a major distinction between redemption and sale on the stock exchange.
Section 47 specifically provides that redemption of an RBI-issued Sovereign Gold Bond by an individual is not regarded as a taxable transfer.
RBI SGB terms generally provide:
- Normal tenor: 8 years;
- Premature redemption option after the fifth year on specified interest-payment dates;
- Interest generally at 2.5% per annum for relevant SGB issuances; and
- Capital gains on redemption to an individual are exempt.
Importantly, the statutory wording focuses on redemption by an individual. It does not say the individual must necessarily have subscribed in the original RBI issue. Therefore, on the wording of Section 47, an individual who buys an SGB in the secondary market and later holds it until qualifying RBI redemption can generally claim the redemption exemption.
That is different from selling the SGB on the stock exchange. An exchange sale is taxable. For transfers after 23 July 2024, a listed SGB held for more than 12 months generally attracts LTCG tax at 12.5% without indexation.
Is SGB Interest Tax-Free?
No.
The capital gain on qualifying redemption may be exempt, but the periodic interest remains taxable. RBI expressly states that SGB interest is taxable under the income-tax law.
For an investor, it is normally reported under the appropriate interest/Other Sources schedule and taxed at applicable rates.
Can Section 87A Make Gold STCG Tax-Free?
Potentially—but do not apply the ₹12 lakh rule blindly.
For AY 2026-27 under the new regime, a resident individual with qualifying total income up to ₹12 lakh can get Section 87A rebate up to ₹60,000. However, the enhanced rebate cannot exceed the tax calculated at the normal Section 115BAC slab rates.
Therefore:
- Gold STCG taxed at normal slab rates may benefit from the rebate, subject to conditions.
- Gold LTCG taxed at the special Section 112 rate should not simply be assumed to become tax-free because total income is below ₹12 lakh.
Which ITR Should Be Filed?
An individual/HUF with gold capital gains and no business or professional income will generally use ITR-2, which supports both short-term and long-term capital gains.
Where the taxpayer also has business/professional income, ITR-3 is generally relevant.
Ordinary gold or silver capital gains should not be forced into ITR-1 or ITR-4 merely because the total income is small.
Frequently Asked Questions
Is long-term gold gain taxed at 20% with indexation in AY 2026-27?
Generally no for gold/silver transfers covered by the post-23 July 2024 regime. The general LTCG rate is 12.5% without indexation.
Does Gold ETF get the ₹1.25 lakh LTCG exemption?
No. The ₹1.25 lakh threshold belongs to qualifying Section 112A equity-oriented capital gains, not ordinary gold ETF gains.
How long should physical gold be held for LTCG?
Generally more than 24 months for transfers under the current framework.
Is SGB maturity completely tax-free?
For an individual, capital gain on qualifying RBI redemption is exempt. The SGB interest remains taxable.
What if I sell an SGB on the exchange instead of redeeming it?
That sale is taxable. If the listed SGB is held for more than 12 months, the gain is generally long-term and taxed at 12.5% without indexation for applicable transfers.
Is gold mutual fund taxation the same as before?
Not necessarily. From AY 2026-27, Section 50AA’s specified-mutual-fund definition has been narrowed substantially, so the actual fund portfolio and whether it satisfies the debt-fund definition must be checked.
