The Union Budget 2024 introduced significant changes to the capital gains tax framework for gold and other assets in India. Understanding these changes is critical for anyone selling gold, whether physical, ETF, or SGB. Here is a complete breakdown of the current rules.
Short-Term Capital Gains
If you sell gold within 24 months of purchase, any profit is classified as a Short-Term Capital Gain (STCG) and taxed at your applicable income tax slab rate. There is no flat rate — if you are in the 30% slab, you pay 30% tax on the gain. This applies to physical gold, gold ETFs, and gold mutual funds.
Long-Term Capital Gains: The Budget 2024 Change
For gold held for more than 24 months, the gain is now classified as a Long-Term Capital Gain (LTCG) taxed at a flat 12.5% without the benefit of indexation. Before Budget 2024, gold attracted 20% LTCG with indexation, which allowed buyers to adjust their purchase price for inflation before calculating the gain. The removal of indexation effectively increases the tax burden for long-term holders who bought gold several years ago at significantly lower prices.
Sovereign Gold Bond Exception
SGBs remain completely exempt from capital gains tax if held until maturity (8 years). If sold before maturity, they attract LTCG at 12.5% after 24 months, or STCG at slab rates within 24 months. The maturity exemption makes SGBs uniquely attractive from a tax perspective.
Inherited and Gifted Gold
Gold received through inheritance is not taxable in the hands of the recipient. However, when you eventually sell inherited gold, the original purchase price and date of the original owner are used for calculating the holding period and cost of acquisition. For gold received as wedding gifts, there is no specified monetary limit under the tax laws, though large amounts should be documented.