Silver Taxation in India (2024–2026): Capital Gains, Customs Duty & GST
1. The New Capital Gains Regime for Silver (Post-Budget 2024–2026)
The Union Budget brought significant structural simplifications to precious metals taxation in India. Physical silver, silver bullion, and Silver ETFs now follow a unified holding period framework:
| Asset Type | Holding Period | Tax Category | Applicable Tax Rate |
|---|---|---|---|
| Physical Silver / Bars / Coins | ≤ 24 Months | Short-Term Capital Gains (STCG) | Taxed at individual Income Tax slab rate |
| Physical Silver / Bars / Coins | > 24 Months | Long-Term Capital Gains (LTCG) | 12.5% Flat (without indexation benefit) |
| Silver ETFs / Mutual Funds | ≤ 24 Months | Short-Term Capital Gains (STCG) | Taxed at individual Income Tax slab rate |
| Silver ETFs / Mutual Funds | > 24 Months | Long-Term Capital Gains (LTCG) | 12.5% Flat (unified parity with physical metal) |
2. Customs Duty Reduction: Impact on Domestic Silver Rates
In July 2024, the Indian Government slashed basic customs duty on unrefined and refined silver imports from 15% down to 6% (plus applicable AIDC surcharges, creating an effective ~6.5% tariff). This duty reduction directly lowered the domestic price premium in India, reducing smuggling incentives and bringing Indian spot prices closer to international London Bullion Market (LBMA) benchmarks.
3. 3% GST on Silver Purchases in India
Every retail silver purchase—whether physical jewelry, bullion bars, or silverware—is subject to a statutory 3% Goods and Services Tax (GST) on the combined value of the metal and making charges. When exchanging old silver for new articles:
- If you sell old silver outright, no GST is charged to the seller.
- If you exchange old silver against a new piece at the same jeweler, GST is applied only on the net difference or making charges if properly invoiced under GST exchange rules.
4. Tax Rules on Gifted and Inherited Silver
Under Section 56(2)(x) of the Indian Income Tax Act:
- Ancestral Inheritance: Silver received via a registered will or direct family inheritance is 100% tax-exempt at the time of transfer.
- Wedding Gifts: Silver utensils or ornaments gifted to a bride or groom during marriage from any person are completely exempt without upper financial limits.
- Non-Relative Gifts: Silver gifted by non-relatives on occasions other than marriage is taxable if the aggregate fair market value exceeds ₹50,000 in a financial year.