Gold Tax – Wanna sell your Gold? Then know how much tax you’ve to pay. Profits made from selling gold jewelry are taxable. Depending on the holding period, either long-term capital gains tax or short-term capital gains tax will apply. Long-term capital gains are defined as the holding period of more than two years, and short-term capital gains are defined as the holding period of less than two years.
According to tax laws, inherited gold is also classified as a capital asset, meaning capital gains tax is payable on any profits from its sale. Importantly, for tax calculations, the original purchase date and purchase price of the gold are considered the same as those of the previous owner (such as your mother or grandmother). For example, if you acquired gold at the time of your marriage in 1981, the purchase price will be the same as that paid by your mother or grandmother.
If you acquired gold before 2001, you also have the option to choose the fair market value (FMV) as of April 1, 2001. It’s also important to understand the difference between short-term and long-term gains when selling jewelry.Previously, the period for long-term capital gains was 36 months, but after the Finance Act 2024, it has been reduced to 24 months. This means that if the gold is more than 24 months old, the profit will be considered long-term and taxed at only 12.5% (without indexation). If sold before 24 months, the profit will be considered short-term and will be taxed according to your income tax slab.
In this case, the gold is several decades old, so it’s clear that you’ll be subject to a long-term capital gains tax of 12.5%. If you don’t have actual records of your gold purchase, you can rely on a valuation report or the historical price determined by the Jewelers’ Association. This means that if you’re selling inherited gold, you should assume it will be taxable. However, the good news is that the rate isn’t high, and with the right documents, tax calculations are easy.