Buying Jewellery: Look for the HUID Hallmark
When purchasing gold jewellery, your primary focus should be on authenticity. As of 2026, it is mandatory for all registered jewellers in India to sell gold that is BIS hallmarked with a six-digit alphanumeric Hallmark Unique Identification (HUID) number.
This code is your guarantee of purity. You can instantly verify it using the BIS CARE mobile app, which provides details about the jeweller, the hallmarking centre, and the purity of the piece. Any jeweller who is unable or unwilling to show you the HUID, or suggests hallmarking is an optional extra, should be avoided. Remember, the hallmark confirms the gold's purity (e.g., 22K or 916), which is crucial for its value.
Decoding Making Charges and GST
The final price of jewellery is always higher than the gold rate due to making charges and taxes. Making charges can range from 5% to over 25% of the gold's value, depending on the design's complexity and the brand. These can be calculated as a percentage of the gold value or as a fixed rate per gram. Always ask for a detailed invoice that lists the gold value and making charges separately. This transparency is important because of the Goods and Services Tax (GST). A 3% GST is applied to the value of the gold, and a separate 5% GST is applied to the making charges. An itemised bill ensures you know exactly what you are paying for and prevents hidden costs.
Investment Option 1: Sovereign Gold Bonds (SGBs)
For those focused purely on investment, Sovereign Gold Bonds (SGBs) are a highly efficient option. Issued by the RBI on behalf of the government, SGBs are securities denominated in grams of gold. Their key advantages are twofold: you earn a fixed interest of 2.5% per year on the investment amount, and the capital gains are tax-free if you hold the bond until its eight-year maturity. Unlike physical gold, there are no making charges or GST on purchase. While new SGB tranches are not being issued post-Budget 2025, they can still be bought and sold on the secondary market through a Demat account, though the tax exemption on maturity may not apply to secondary purchases.
Investment Option 2: Gold ETFs and Mutual Funds
Gold Exchange Traded Funds (ETFs) and Gold Mutual Funds offer a way to invest in gold digitally without the hassles of physical storage. A Gold ETF trades on the stock exchange like a share, with its price tracking the domestic price of physical gold. To invest, you need a Demat and trading account. Gold Mutual Funds are even simpler, as they don't require a Demat account; these funds invest in Gold ETFs on your behalf. Both options are highly liquid, meaning you can buy and sell them easily. They are ideal for investors who want exposure to gold prices with flexibility and without incurring making charges or GST.
Investment Option 3: Digital and Physical Gold
Digital gold allows you to buy 24K gold online through various platforms, often starting with investments as low as ₹1. The gold is stored in insured vaults on your behalf. While convenient, it's important to note that the digital gold space is not as regulated as other options. All purchases attract a 3% GST. Of course, the traditional method of buying physical gold coins and bars remains popular. For investment purposes, 24K coins or bars are preferable to jewellery as they have minimal making charges and retain their value better upon resale. However, you must consider the costs and risks of secure storage.
Understanding Tax on Your Gold Profits
When you sell gold for a profit, you are liable to pay capital gains tax. For physical gold, digital gold, and gold funds, the holding period is 24 months. If you sell within 24 months, the profit is a Short-Term Capital Gain (STCG) and is taxed at your income tax slab rate. If you sell after holding for more than 24 months, the profit is a Long-Term Capital Gain (LTCG) and is taxed at a flat rate of 12.5%, without the benefit of indexation. Only SGBs held to maturity offer a tax-free exit on capital gains.
