Income Tax on Selling Gold in India: KYC Rules, Thresholds & LTCG
Selling unused family gold for UPI or bank transfer is 100% legal, but staying compliant with Indian income tax laws ensures your proceeds remain clean and audit-ready. Here is what you need to know about KYC requirements and taxation.
When is a PAN Card Mandatory for Gold Transactions?
- Selling Gold: Reputable gold buyers require a PAN card and valid Aadhaar identification for high-value transactions to comply with RBI anti-money laundering (AML) guidelines.
- Bank Settlements: Receiving payments directly into your savings bank account via UPI or IMPS creates an undisputed, clean paper trail.
How Capital Gains Tax Works on Gold
- Long-Term Capital Gains (LTCG): If you hold physical gold or jewellery for more than 12 months, profits are taxed at a flat rate of 12.5% (without indexation).
- Short-Term Capital Gains (STCG): If you sell within 12 months of purchase, gains are added directly to your annual taxable income slab.
- Inherited Gold Exception: Inheriting ancestral gold does not trigger tax. You only calculate tax when you decide to convert that inherited gold into money, taking the original owner's purchase period into account.
Rule of thumb: Always insist on a formal purchase voucher showing gross weight, karat reading, and payment reference numbers to hand over to your Chartered Accountant during tax filing.
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