For new money in 2026 the real choice is a gold ETF or a gold fund of funds. No new SGBs have been issued since February 2024, and jewellery costs 3% GST plus about 6–25% in making charges. Gold ETFs become long-term after 12 months; gold FoFs need more than 24.
Jewellery is still how most Indians own gold. India is the world's second-largest consumer of gold, after China, according to the World Gold Council's figures for 2025, and households hold an estimated 25,000 to 34,600 tonnes, several times the roughly 8,133 tonnes of official gold held by the US Treasury. Below are the four main ways to own gold in 2026 and the tax changes of the past two years.
1. Physical Gold: Jewellery, Coins and Bars
You pay the gold price plus several costs that you do not get back when you sell.
- GST: 3% on the value of gold, coins and bars. For ready-made jewellery, the 3% applies to the whole bill, including making charges.
- Making charges: commonly about 6–25% on jewellery, higher for intricate designs. Wastage charges of about 2–15% may be added, depending on the design.
- Storage: a bank locker costs from about ₹1,500 a year (small, SBI urban) to ₹20,000 or more (extra-large, HDFC Bank metro, from April 2026), plus 18% GST.
- Hallmarking: since 1 April 2023, hallmarked jewellery must carry a 6-digit HUID (hallmark unique ID). Mandatory hallmarking covered 392 districts as of August 2026. Gold coins and bars are not required to be hallmarked, so buy them from a trusted seller.
- Tax: sold after more than 24 months, gains are taxed at 12.5% without indexation. Sold earlier, gains are taxed at your income-tax slab rate.
When it makes sense: for jewellery you will actually wear. Treat that as spending, not investing.
2. Sovereign Gold Bonds (SGBs)
SGBs were government bonds, issued by the RBI, whose value tracks the price of gold. Each unit equals one gram. They run for 8 years, pay 2.5% a year interest on the original issue price (taxed at your slab rate, with no TDS), and have no storage or making charges.
What has changed:
- No new SGBs since February 2024. The last tranche, SGB 2023-24 Series IV, opened on 12–16 February 2024 at ₹6,263 a gram. In February 2025 the finance ministry indicated the scheme had effectively been stopped because it was costly borrowing for the government. You cannot subscribe to new bonds.
- You can only buy existing bonds on NSE or BSE. Trading volumes are thin, and prices can differ from the value of the gold behind them.
- The tax-free maturity now has conditions. From 1 April 2026, gains at maturity are tax-free only if you subscribed at the original issue and held the bond continuously until maturity. If you bought on the exchange, gains at maturity are taxed: at 12.5% if held more than 12 months.
- Early redemption: the RBI allows redemption after the fifth year, on interest dates. Under the new wording, such early redemptions also appear to be taxable; no official clarification had been issued as of September 2026, so check with a tax adviser.
- Selling on the exchange: held more than 12 months, 12.5% without indexation; otherwise slab rate.
The interest is smaller than it looks for exchange buyers. The 2.5% is paid on the original issue price, not on what you pay. The RBI's early-redemption price for SGB 2021-22 Series VI on 7 September 2026 was ₹15,334 a unit. A bond issued at ₹6,263 pays about ₹157 a year, roughly 1% of that price.
For original holders, SGBs worked well. SGB 2017-18 Series XIV, issued at ₹2,881 a gram (₹2,831 online), was finally redeemed at ₹13,486 on 1 January 2026, plus eight years of interest. For original subscribers, that gain was tax-free.
3. Gold ETFs
A gold ETF (exchange-traded fund) holds physical gold and trades on the stock exchange like a share. You need a demat account.
- Cost: expense ratios range from 0.35% to 0.81% a year.
- Unit price: most gold ETF units traded at about ₹120–131 on 29 September 2026; a few newer ones trade at about ₹14–23. You can start with one unit.
- Liquidity: you can buy or sell any time the market is open. Check the bid-ask spread and pay brokerage.
- Tax: held more than 12 months, 12.5% without indexation; otherwise slab rate.
- Valuation: from 1 April 2026, SEBI requires gold ETFs to value their gold using domestic exchange-published spot prices.
| Largest gold ETFs | NSE symbol | Expense ratio | AUM (₹ Cr) |
|---|---|---|---|
| Nippon India ETF Gold BeES | GOLDBEES | 0.81% | 58,629 |
| ICICI Prudential Gold ETF | GOLDIETF | 0.49% | 28,325 |
| SBI Gold ETF | SETFGOLD | 0.65% | 27,085 |
| HDFC Gold ETF | HDFCGOLD | 0.59% | 24,417 |
| Kotak Gold ETF | GOLD1 | 0.52% | 14,989 |
AUM as of 31 August 2026; expense ratios as of 28–29 September 2026 (AMC pages and sharpely). For more detail see best gold ETFs, Gold BeES review and SBI Gold ETF review.
4. Gold Mutual Funds (Fund of Funds)
A gold fund of funds (FoF) invests in a gold ETF, so you don't need a demat account and can run a SIP; the gold SIP calculator shows what one could grow to after tax. You pay the FoF's own expense ratio on top of the ETF's. For example, Nippon India Gold Savings Fund (Direct) charged 0.06% on top of Gold BeES's 0.81%, about 0.87% in all; SBI Gold Fund (Direct) charged 0.24% on top of SBI Gold ETF's 0.65%, about 0.89% (AMC data, August–September 2026). Both of these charge a 1% exit load if you redeem within 15 days. Gains are taxed at 12.5% without indexation only after more than 24 months, not 12; earlier gains are taxed at slab rate.
Head-to-Head Comparison
| Factor | Physical gold | SGB | Gold ETF | Gold FoF |
|---|---|---|---|---|
| Can you buy it new today? | Yes | No; exchange only | Yes | Yes |
| Return | Gold price, less making charges, GST and storage | Gold price plus 2.5% a year on issue price | Gold price, less expense ratio | Gold price, less ETF and FoF expenses |
| GST on purchase | 3% | None | None | None |
| Storage | Locker or home | None (demat or RBI) | None (demat) | None |
| Long term after | 24 months | 12 months (exchange sale) | 12 months | 24 months |
| Long-term tax | 12.5%, no indexation | Tax-free at maturity for original subscribers only; otherwise 12.5% | 12.5%, no indexation | 12.5%, no indexation |
| Short-term tax | Slab rate | Slab rate | Slab rate | Slab rate |
| Liquidity | Depends on the jeweller | Thin on exchange; RBI exit after year 5 | High, during market hours | Redeem any business day |
Tax rules for sales from 1 April 2025, carried into the Income-tax Act, 2025 from 1 April 2026; SGB rule from the Finance Act 2026. As of 29 September 2026.
Gold's Returns Swing Both Ways
Gold has done well in rupees over long periods: roughly 11.8% a year from 1995 to 2025, per Aditya Birla Capital's price history, well ahead of inflation. Every form of gold captures that, before its own costs; it is not special to SGBs. Recent years were exceptional. To 31 August 2026, Gold BeES returned 36.07% a year over three years and 25.46% over five, per Nippon's product note. But in 2026 its NAV fell about 22% from its 29 January peak to 23 March. Gold can be volatile, and past returns do not repeat on schedule.
How to Think About It
- If you already hold SGBs bought at original issue, keeping them to maturity preserves the tax exemption.
- For new money, the realistic choices are gold ETFs, gold FoFs, or existing SGBs on the exchange (which are now taxable at maturity for you). ETFs have the shortest holding period for long-term tax; FoFs suit SIPs without a demat account.
- Treat jewellery as consumption. GST and making charges make it the most expensive way to invest.
How much gold to hold depends on your goals and the rest of your portfolio. Compare the options with our gold investment comparator, or read about the hidden risks of metal ETFs.
This guide explains how these options compare. It is not a recommendation to buy any specific fund or product.
