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Moment guide · FY 2026-27

I'm selling gold or sovereign gold bonds

How is capital gains tax on gold, gold ETFs and SGBs calculated in FY 2026-27?

Sec 112ASec 50AASec 47(viic)Sec 50(2)Verified 2026-08-11

For physical gold, coins and jewellery held over 24 months, LTCG is taxed at 12.5% with no indexation; under 24 months, gains are taxed at your slab rate. Gold ETFs and gold mutual funds are specified mutual funds, so redemption is taxed at slab under section 50AA no matter how long you held them. SGBs held to maturity are exempt for individuals/HUFs, but a secondary-market sale after 12 months is LTCG at 12.5%.

Your legitimate options

Every route the statute actually gives you — with its condition, cap and deadline.

RouteConditionCap / deadline
Physical gold / jewellery LTCGHeld more than 24 months12.5% with no indexation
Physical gold / jewellery STCGHeld 24 months or lessSlab rate
Gold ETF / gold mutual fund redemptionAny holding period — specified mutual fund under s.50AASlab rate, no LTCG rate or indexation
SGB sale before maturityHeld more than 12 monthsLTCG at 12.5%, no indexation
SGB maturity redemptionHeld to maturity (8 years) by individual/HUFExempt under s.47(viic)

The #1 trap

Do not treat gold ETFs or gold mutual funds like physical gold — after s.50AA their redemption is taxed at slab rate regardless of how long you held them; only physical gold/jewellery and SGB secondary sales get 12.5% LTCG without indexation, and only SGB maturity is fully exempt.

The decision path

Follow it top to bottom — the first condition that matches is your answer.

  1. IF physical gold/jewellery held > 24 months → LTCG at 12.5% on the full gain (no indexation)
  2. IF physical gold/jewellery held ≤ 24 months → STCG at your slab rate
  3. IF redeeming gold ETF / gold MF → slab rate under s.50AA regardless of holding period
  4. IF selling SGB in the secondary market after 12 months → LTCG at 12.5%
  5. IF SGB redeemed at maturity → exempt for individual/HUF; only the 2.5% annual interest is taxable

Worked example

Meera, creative director and retail investor

Meera bought 200 grams of gold in January 2020 at ₹4,400 per gram for ₹8.80 lakh, plus 1.5% making charges on jewellery that cost her ₹12 lakh total when bought in 2020. In March 2026 she sells that jewellery at ₹7,100 per gram, receiving about ₹14.20 lakh for the gold content. Holding period is over six years, so the gain is long-term. Under pre-FA-2024 rules she could have used indexation and paid tax at 20%; for FY 2026-27 that route is gone. Her LTCG is approximately ₹14.20 lakh minus the indexed-ineligible cost of ₹8.80 lakh = ₹5.40 lakh. At 12.5%, the tax is ₹67,500 (plus applicable cess). There is no cost inflation index adjustment anymore. Separately, Meera owns ₹2 lakh of Sovereign Gold Bonds issued in January 2019. They mature in January 2027. Because they are redeemed at maturity by an individual, the redemption is exempt under section 47(viic). She is often tempted to sell them early to book a ₹60,000 gain, but she checks: selling in the secondary market after holding more than 12 months gives LTCG at 12.5% — ₹7,500 tax on the ₹60,000 gain — while holding to maturity keeps the entire gain tax-free. She decides to wait. She also holds a small gold ETF bought in 2021 at ₹62 per unit; units now trade at ₹88, a gain of ₹26 per unit. Because gold ETFs are specified mutual funds under section 50AA, the redemption gain is taxed as short-term capital gain at her slab rate — about 30% plus cess — even though she held for five years. She compares keeping the ETF versus switching into SGB via the next tranche, and realises the SGB route is more tax-efficient if she can hold to maturity. One trap she avoids: believing the ₹1.25 lakh section 112A threshold applies to gold. It does not — 112A covers listed equity and equity-oriented fund units, not physical gold or gold funds. A quick call with us dials in the final figure.

Questions people actually ask

Is sovereign gold bond maturity tax-free?

Yes. For individuals and HUFs, redemption of SGBs at maturity is exempt under section 47(viic); only the annual 2.5% interest is taxable at slab rate.

What is the LTCG rate on physical gold after 23-July-2024?

12.5% on the gain, with no indexation. For assets held over 24 months, the old 20% with indexation is gone for FY 2026-27.

Are gold ETFs taxed like physical gold?

No. Gold ETFs and gold mutual funds are specified mutual funds under section 50AA, so redemption is taxed at slab rate irrespective of holding period.

Can I set off my gold LTCG against a long-term capital loss from shares?

Yes — long-term capital loss can be set off against long-term capital gains from any asset, including gold, and the balance, if any, carries forward 8 years.

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Sections: 112A, 50AA, 47(viic), 50(2) · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).