The taxman can take away your gold gains

AS GOLD PRICES have touched record highs, many families are perhaps tempted to unlock some of that legacy. Whether it is to meet financial goals, diversify portfolios, or simply take advantage of the high prices, selling gold seems like a smart move.

- NEERAJ AGARWALA

But before you do, there’s one crucial aspect to consider — tax.

Gold gains are taxed

When you sell physical gold be it jewellery, coins, or biscuits, the profit you earn is taxed as capital gains. The rate of taxation depends on the holding period of such gold.

If you have held the gold for more than 24 months, your profit is classified as a long-term capital gain and taxed at 12.5%. If you sell before that, it’s considered a short-term capital gain, added to your income and taxed at your applicable income tax slab rate.

The same logic applies to digital gold, which has become a modern way to invest without worrying about storage or purity. For gold ETFs and mutual funds, too, taxation mirrors physical gold, i.e., 12.5% for long term capital assets.