Planning To Buy Gold on Dhanteras 2025? Check Tax Rules for Gold Jewellery, Coins, ETFs & Sovereign Gold Bond

As the festive season of Dhanteras and Diwali approaches, Indian investors continue their time-honoured tradition of turning to gold. While the allure of physical gold remains strong, more investors are now seeking smarter, tax-efficient, and secure alternatives like Sovereign Gold Bonds (SGBs) and Gold Exchange-Traded Funds (ETFs).

Planning To Buy Gold on Dhanteras 2025: Complete Tax Guide for Gold Jewellery, Coins, ETFs and Sovereign Gold Bonds

From capital gains tax exemptions to portfolio diversification, SGBs and Gold ETFs present compelling options for both short-term traders and long-term investors. Here is a comprehensive look at how these two investment routes compare-especially from a taxation and return-on-investment standpoint.

How Gold ETFs Taxed?

Gold ETFs work like mutual funds that you can buy and sell on the stock market. They track the price of gold, so you get the same gains without holding physical gold. The taxes on Gold ETFs depend on when you buy them and how long you keep them.

If you bought units before April 2023, short-term gains (if held up to 3 years) are taxed as per your income slab. For units bought between April 2023 and March 2025, all gains are taxed as short-term. After April 2025, if you hold for more than 12 months, gains are taxed at a flat 12.5%, without any adjustments.

Tax Benefits of Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are issued by the Reserve Bank of India and come with an added benefit-a fixed interest of 2.5% every year. The interest you earn is taxable, but the best part is that when you redeem these bonds after 8 years, your capital gains are completely tax-free. If you sell SGBs before 8 years, you will have to pay capital gains tax.

How Does Tax on Physical Gold Differ From SGB and Gold ETF?

Physical gold, like jewellery or bars, has different tax rules. If you sell after holding it for more than 3 years (soon to be 2 years), you pay 20% tax with indexation or 12.5% without it. Short-term gains are taxed as per your income slab. Plus, physical gold has extra costs like making charges and storage, which can eat into your profits.

Which Is Better: Gold ETFs or Sovereign Gold Bonds?

Gold ETFs are great if you want easy buying and selling, while SGBs suit those who want steady income and tax-free gains on maturity. Keeping records of your transactions is important to follow tax rules.

Combining Gold ETFs and SGBs for a Balanced Portfolio

Many experts suggest mixing both Gold ETFs and SGBs to get the benefits of both-liquidity, steady income and tax efficiency. In the end, it depends on your financial goals. Gold ETFs offer flexibility and loss adjustments, while SGBs provide interest income and tax-free redemption, making each useful in different ways.

Disclaimer

The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.