How Do You Calculate Profit on a Physical Gold Investment?
Formula: Profit = Current Melt Value − (Purchase Price + Making Charges + GST)
Making charges (8–25% depending on jewellery complexity) are a sunk cost — you never recover them when selling. This is why gold coins and bars (0–2% making charges) are better for pure investment compared to ornate jewellery.
What Taxes Apply to Gold Investment Profits in India?
Short-term (<3 years): Taxed at your income tax slab rate (up to 30%). Long-term (≥3 years): 20% with indexation benefit, which significantly reduces effective tax. Sovereign Gold Bonds: Zero LTCG tax if held to maturity.
This calculator applies 30% for short-term and 20% for long-term as a conservative estimate. Actual tax may be lower depending on your income slab and indexation benefits.
Is Physical Gold a Better Investment Than Fixed Deposits?
Over the last 10 years, gold has delivered approximately 10–12% CAGR in INR terms, compared to 6–7% for FDs. However, gold has higher volatility and no guaranteed returns. Gold works best as a portfolio diversifier (5–15% allocation) rather than a primary investment vehicle.
Consider a gold loan instead of selling if you need liquidity — you retain the gold's upside while accessing cash.