Silver at Record High Ahead of Dhanteras: Know How Much Tax You'll Pay on Profits and Key Income Tax Rules

Silver Hits Historic Peak Before Diwali: Here’s How Capital Gains Tax Applies on Your Investment

As India gears up for Dhanteras and Diwali, silver prices have reached record-breaking levels, igniting a fresh wave of festive buying and investment enthusiasm. In just one year, the price of silver has surged nearly 90%, touching ₹1,85,000 per kilogram (including taxes) — the highest ever in Indian market history.

While this surge has delighted investors and traders, it also raises a crucial question: how much tax will you pay on silver profits if you plan to sell or invest this festive season? Here’s a detailed look at the income tax rules and capital gains regulations governing silver investments in India.

Rising Silver Demand Before Dhanteras

Traditionally, Indians consider buying gold and silver on Dhanteras auspicious. However, this year, silver has emerged as a popular investment option, offering impressive returns and long-term stability.

As festive demand and global market trends push prices upward, silver’s one-year rally of nearly 90% has outperformed many traditional assets. On Tuesday, the price jumped ₹6,000 in a single day, climbing to ₹1.85 lakh per kg, signaling strong investor confidence and limited supply ahead of the festive rush.

Different Ways to Invest in Silver

Today’s investors have multiple ways to gain exposure to silver — from physical assets to modern digital and market-based options.

Physical Silver – Coins, bars, and jewelry remain the most traditional form of investment.

Digital Silver – Online platforms and apps allow easy purchase and storage of silver in fractional quantities.

Silver ETFs – These exchange-traded funds function like mutual funds, enabling investors to trade silver units on stock exchanges.

Each investment method carries different tax implications under Indian law.

Tax Rules on Silver Investment in India

Under the Income Tax Act, silver is classified as a capital asset. Hence, profits earned from selling silver are subject to capital gains tax. The rate depends on how long the asset was held before being sold.

1. Physical Silver (Coins, Bars, Jewelry)

• Long-Term Capital Gains (LTCG):
  If silver is held for 24 months or more, a 12.5% LTCG tax is applied on the profit.

• Short-Term Capital Gains (STCG):
  If sold within 24 months, profits are added to your regular income and taxed according to your income tax slab.

• Additional Charges:
  Buyers must also pay 3% GST on the purchase value, plus making charges and GST on jewelry.

2. Digital Silver

• Digital silver follows the same tax rules as physical silver.

• A 3% GST applies during purchase, along with possible platform fees or storage charges.

3. Silver Exchange-Traded Funds (ETFs)

• LTCG Tax: A 12.5% tax applies if units are held for 12 months or more.

• STCG Tax: If sold within a year, profits are taxed as per the investor’s income slab.

• No GST is levied on ETFs, but brokerage, SEBI, and exchange charges may apply.

Performance of Leading Silver ETFs in India

ETF Name1-Year Return3-Year Return

ICICI Prudential Silver ETF	90%	199%
Axis Silver ETF	102%	215%
Nippon India Silver ETF	98%	208%
HDFC Silver ETF	99%	217%
Aditya Birla Silver ETF	100%	212%

Source: Groww

The consistent double-digit returns highlight why silver ETFs have become a preferred investment choice, offering both liquidity and safety with regulated market exposure.

Expert Insight: What Investors Should Keep in Mind

Financial experts advise investors to consider holding period and tax impact before buying or selling silver this festive season. While short-term profits may attract higher taxes, long-term investments in silver — whether physical, digital, or through ETFs — can yield significant post-tax returns.

Given the ongoing rally, investors should also track global silver prices, USD-INR exchange rates, and government import duties, as these factors heavily influence domestic silver rates.

Bottom Line

With silver crossing the ₹1.85 lakh per kilogram mark ahead of Dhanteras, it has become one of the most talked-about investment assets this festive season. However, before cashing in on profits, it’s vital to understand the capital gains tax rules applicable to your investment type.

Whether you’re buying silver for auspicious reasons or viewing it as a long-term asset, being aware of tax obligations and potential returns will help you make smarter financial decisions this Diwali.

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