What are the rules for buying gold in India?

Rules for buying gold in India (2026): What’s changed and what hasn’t

India has tightened how gold is bought and sold – without changing the basic freedoms to own it. If you’re buying jewellery, bars/coins, digital gold, ETFs, or SGBs in 2026, you’ll face clearer hallmarking norms, stricter KYC and cash rules, and product-specific tax treatment. This guide distills the rules so you can buy gold confidently – and compliantly.

Why this matters now

• Hallmarking with HUID is mandatory, KYC is tighter, and cash rules are stricter.

• Different tax rules apply depending on whether you buy jewellery, coins/bars, digital gold, ETFs, or SGBs.

“Centre notifies the third phase of mandatory hallmarking from 8 September 2023 – expanding HUID hallmarking coverage to 343 districts.” – Source

Source note: Editors may replace with the latest BIS/Department of Consumer Affairs order or press release if updated.

Quick snapshot

• ID needed: PAN/Aadhaar typically required for large purchases (₹2 lakh+).

• Cash cap: Cash payments of ₹2 lakh or more aren’t allowed in a single transaction.

• Purity: Buy only BIS-hallmarked jewellery with a 6-digit HUID on the invoice.

• Holding limits: No official cap on owning gold if the source is explained; tolerance limits apply during searches.

• Taxes: 3% GST on gold value + 5% on jewellery making charges; capital gains differ by product and holding period.

What this guide covers

• KYC, payment and hallmarking rules.

• GST and price breakdown you’ll actually see on your bill.

• Legal holding limits at home and how CBDT rules work.

• Capital gains on selling various gold products in FY 2025–26.

• Practical checklists, mistakes to avoid, and a modern, compliant way to buy gold digitally.

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KYC, payment and hallmarking: The rules to follow before you buy

KYC you’ll likely need

• PAN or Aadhaar typically required for high-value purchases (commonly ₹2 lakh+).

• Jewellers must maintain KYC/transaction records; splitting bills to dodge limits can attract scrutiny.

Payment rules

• No cash payment of ₹2 lakh or more in a single transaction.

• Use UPI, cards, net-banking for seamless, compliant payments.

Hallmarking and HUID

• Buy only BIS-hallmarked jewellery.

• Ensure the 6-digit alphanumeric HUID appears on the bill and matches the piece.

Your safe-buying checklist

• Verify purity (22K/18K) + hallmark + HUID.

• Ask for a tax invoice with GST breakdown and jeweller’s GSTIN.

• Avoid cash above limits; don’t split invoices.

• Keep all documents (invoice, certificate/warranty).

“India is consistently among the world’s top gold consumers – WGC reports show India’s annual demand in the hundreds of tonnes every year.” – Source

GST and the price you pay: Jewellery vs coins/bars vs digital gold

GST basics

• 3% GST on the value of gold (jewellery, coins, bars, digital gold purchases).

• Additional 5% GST on jewellery making charges (if charged separately).

What’s in your final price

• Base gold value (linked to live bullion rates + jeweller margin).

• Making charges (jewellery only; vary by design/karat/brand).

• GST: 3% on gold value + 5% on making charges.

• Import duties and other levies are embedded in market prices (change via govt notifications).

Tip

• For coins/bars with negligible making: total tax impact is usually lower than ornate jewellery.

• Digital gold buys attract 3% GST on acquisition; no GST on selling back (capital gains rules apply instead).

Sample on-bill price breakup (illustrative)

Jewellery purchase example:

Component	Rate/Assumption	Amount (₹)
Base gold value	Example: ₹50,000	50,000
Making charges (%)	10% of base value	5,000
GST 3% on gold value	3% of ₹50,000	1,500
GST 5% on making charges	5% of ₹5,000	250
Final payable	Sum total	56,750

Coins/bars example (lower making):

Component	Rate/Assumption	Amount (₹)
Base gold value	Example: ₹50,000	50,000
Making charges (%)	1% of base value	500
GST 3% on gold value	3% of ₹50,000	1,500
GST 5% on making charges	5% of ₹500	25
Final payable	Sum total	52,025

How much gold can you keep at home? Legal holding limits and search tolerance

The two truths most people miss

• There is no statutory cap on the total gold you can own if the source is explained and documented.

• During searches, CBDT-prescribed tolerance limits guide officers on what not to seize even without documents.

CBDT tolerance limits during searches (guidance)

• Married woman: up to 500 g

• Unmarried woman: up to 250 g

• Men (married or unmarried): up to 100 g

Gold beyond these limits is NOT automatically illegal or seized – you may simply be asked to explain the source (income, gift, inheritance) and show documents.

Documentation that helps

• Purchase invoices with your name and payment mode.

• Gift deed or invoice in donor’s name; inheritance papers (will/family settlement).

If you can’t explain the excess

• Unexplained gold can be taxed at high rates with surcharge/cess and penalties.

“CBDT Instruction No. 1916 (11 May 1994) prescribes non-seizure tolerance limits during searches; CBDT’s 2016 press note reiterates there is no limit on holding jewellery if sources are explained.” – Source

Income tax on selling gold in FY 2025–26: Physical, digital, ETFs and SGBs

Physical gold (jewellery/coins/bars) and digital gold (vaulted)

• Treated as capital assets. Short-term gains: added to income and taxed per slab if sold within the short-term window.

• Long-term gains: taxed per prevailing rules (historically 20% with indexation after 36 months for physical/digital gold). Check latest Finance Act/CBDT updates before filing.

Gold ETFs and gold mutual funds

• Tax rules updated recently. As of FY 2024–25 reforms, many listed non-equity financial assets moved to a 12.5% LTCG without indexation beyond 12 months; STCG taxed per slab. Confirm the latest CBDT circulars for the current year’s treatment of gold ETFs/MFs you hold.

Sovereign Gold Bonds (SGBs)

• Interest (2.5% p.a. currently) is taxed per slab.

• Redemption by RBI at maturity (8 years) is exempt from capital gains for individuals.

• If sold before maturity (secondary market or early redemption windows), capital gains tax may apply as per period/listing rules.

Gifts and inheritance

• Receiving gold is tax-free if from specified relatives, on marriage, or via will/succession. If later sold, capital gains apply using original owner’s holding period for LTCG/STCG classification.

Tax snapshot by product (FY 2025–26 – indicative)

Product Type	STCG Rule	LTCG Rule/Rate & Holding Period	Special Notes
Physical/Digital Gold (vaulted)	Added to total income; taxed per slab when sold within short-term window (historically <36 months)	Historically 20% with indexation after 36 months; verify latest rules before filing	Keep invoices and transaction history to establish cost and holding period
Gold ETF/MF (listed, non-equity)	Taxed per slab if sold within 12 months (verify classification of your fund)	Indicatively 12.5% without indexation beyond 12 months as per FY 2024–25 rationalisation; confirm current-year status	Post-2024 reforms changed treatment for several non-equity funds – check your AMC’s tax note
Sovereign Gold Bonds (SGBs)	If sold before maturity, gains taxed per period/listing rules; short-term gains taxed per slab	Redemption by RBI at 8-year maturity is exempt for individuals	2.5% annual interest is always taxed per slab; early exits may attract capital gains
Disclaimer	–	–	Always verify the latest Finance Act, CBDT circulars, and your broker/AMC tax notes before filing returns

Bringing gold into India: Customs rules at a glance

Duty-free allowances (indicative; verify latest CBIC notifications)

• Duty-free jewellery allowances differ by gender, value and duration of stay abroad (e.g., longer stays abroad typically allow a higher jewellery value limit).

• Allowances generally apply to jewellery for personal use carried in baggage; quantities must be “reasonable.”

• Coins/bars typically don’t qualify for duty-free allowance; they must be declared and applicable duty paid.

• If you exceed allowances, you must declare the gold at Red Channel and pay duty as per current CBIC rates. Non-declaration can lead to confiscation and penalties.

Practical tips at the airport

• Carry purchase receipts/invoices with metal purity, weight and value, and keep them handy at customs.

• Declare proactively if you exceed allowances; voluntary disclosure reduces hassle and risk.

• Prefer jewellery over bullion if you wish to utilise duty-free limits; bullion is usually dutiable.

• Match invoices to the traveler’s name; keep items accessible for inspection (avoid hiding/“muling” for others).

• Pack carefully (hand baggage preferred) and avoid removing purity tags/seals that help verification.

Note

• CBIC revises duty rates, cess/surcharges and baggage allowances from time to time. Always check current rules and airline/admissible carriage policies before you fly.

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Documentation and fraud-proofing: Invoices, HUID and what to check

Your invoice must include

• Buyer and seller details, seller GSTIN.

• Karat/purity, net weight, making charges.

• GST breakdown (3% on gold, 5% on making charges for jewellery).

• HUID (6-digit) and hallmark stamp details.

How to verify the hallmark

• Match the HUID on-piece with the invoice.

• Use the BIS Care app/site to verify hallmark/HUID.

Avoid these pitfalls

• Unhallmarked jewellery marketed as ‘discounted’.

• Cash demands over limits; split bills.

• Vague invoices without HUID or GST breakdown.

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Common mistakes that get buyers in trouble (and how to avoid them)

The big five

1. Paying ₹2 lakh or more in cash or splitting invoices to bypass limits.

   • Cash caps are strict. Splitting bills is tracked and can invite scrutiny and penalties.

2. Buying unhallmarked jewellery without HUID and a proper invoice.

   • If there’s no BIS hallmark and 6-digit HUID on both piece and bill, walk away.

3. Not keeping proofs for gifted/inherited gold.

   • Missing gift deeds, old invoices or inheritance papers makes explaining sources hard during checks.

4. Assuming you can’t own more than the CBDT tolerance limits.

   • Those are search “non-seizure” thresholds – not a legal ownership cap. You can own more if the source is explained.

5. Ignoring capital gains rules when selling or switching products.

   • STCG vs LTCG, indexation, and special SGB rules can change your tax outgo meaningfully.

Quick fixes

• Go digital (UPI) for payments; keep invoices safe (cloud + physical).

• Verify hallmark/HUID every time; walk away if it doesn’t check out.

• Log gifts/inheritance with simple deeds and retain old invoices.

• Before selling, check holding period and current tax rules.

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Conclusion: Buy gold the right way – then make it work harder with OroPocket

Buying gold in India is simple when you follow the rules: verify hallmarking and HUID, pay digitally, keep invoices, respect cash/KYC thresholds, and plan for taxes before you sell. If you want a compliant, convenient, and modern experience, switch to digital gold on OroPocket.

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