Tax Rules You Should Know on Gold Ahead of Diwali and Dhanteras 2026

With Dhanteras and Diwali approaching, many households are wondering whether to buy gold during this traditionally auspicious period.  

However, gold taxation in India can be quite confusing. This guide breaks down everything you need to know about how your gold is taxed. 

No Legal Limit on Gold Ownership 

Historically, India imposed strict restrictions on private gold holdings under the Gold Control Act of 1968. At the time, citizens were barred from owning gold beyond a certain limit. However, the Act was abolished in 1990, and today, there is no legal ceiling on how much gold an individual can possess, as long as its source is legitimate.  

This means that whether your gold is inherited, gifted, or purchased, you can legally own any quantity, provided you can back it up with documentation like purchase invoices, inheritance records, or disclosed assets in your income tax filings.  

How is Gold Taxed in India?   

The taxation of gold depends on both the form of investment and how long you have held it. Whether you are investing in physical gold, digital gold, or gold Exchange-Traded Funds (ETFs), the asset is treated as a capital asset and taxed accordingly.  

Short-Term Capital Gains (STCG)   

Applies when physical or digital gold is sold within 24 months of purchase (12 months for listed Gold ETFs) 

Gains are added to your total income and taxed as per your income tax slab rate.  

Long-Term Capital Gains (LTCG)   

Applies if physical or digital gold is held for more than 24 months (more than 12 months for listed Gold ETFs). 

Taxed at a flat 12.5% under the current regime (without indexation benefit). 

Also Read: Muhurat Trading 2026: Cultural Significance and Historical Returns! 

Conclusion 

Earlier, LTCG allowed for indexation, which adjusted the purchase price for inflation, thereby reducing your tax liability. However, the newer system, while simpler, takes away this inflation-adjustment benefit, making gold investments slightly less tax-efficient in the long run.  

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.     

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.