How to Report Digital Gold in ITR: Schedule and Forms
Table of Contents
Filing season is when your mind is focused on finances. Somewhere in the year, a few grams of digital gold were sold at a profit, and now the return is open on the screen with no obvious box for it. Reporting digital gold in ITR is simpler than it looks once two variables are fixed: how long the gold was held, and which return form applies. Digital gold is treated as a capital asset under Indian income tax law, so any profit on sale is taxable as capital gains and goes into Schedule CG of the return, not into salary or other income. This guide covers the form choice between ITR-2 and ITR-3, the current short-term and long-term tax rates with a worked example, the documents to keep at hand, and a step-by-step walkthrough of Schedule CG on the e-filing portal.
Is Digital Gold a Capital Asset for Income Tax Purposes?
Yes. Digital gold bought through an app or platform is classified as a capital asset under the Income Tax Act, in the same family as physical gold and jewellery. Profit on its sale is therefore taxed as capital gains, not as ordinary income.
One exception exists. Where a person buys and sells gold as a regular trading activity, the profits can be assessed as business income instead. For the typical retail investor who bought a few grams and sold later, capital gains treatment applies.
A separate caution is worth stating plainly. SEBI flagged in November 2025 that digital gold, while legally tradeable, is not a regulated product, and under the RBI directions effective 2026 digital gold balances are not eligible as collateral for a gold loan. Tax still applies to gains regardless of that regulatory status.
Which ITR Form Applies for Digital Gold?
The choice comes down to two forms:
- ITR-2: for salaried individuals and others whose income includes capital gains but no business or professional income.
- ITR-3: for taxpayers who also have business or professional income alongside the capital gains.
ITR-1 (Sahaj) is off the table either way, since it has no place for a digital gold sale at all.
ITR-1 (Sahaj): Not Applicable for Digital Gold Gains
ITR-1 carries no Schedule CG, so it cannot report a digital gold sale. A salaried taxpayer who would normally file ITR-1 has to move up to ITR-2 for any year in which digital gold, or any other such capital asset, was sold.
ITR-2: For Salaried Individuals and Capital Gains
ITR-2 fits most individual investors: salary plus capital gains, with no business income. Schedule CG within ITR-2 is where the digital gold sale is entered, under the rows for assets other than listed securities. Salary details pre-fill from Form 16 data, and the gains section is completed manually from platform records.
STCG and LTCG Tax Rates on Digital Gold (Current Rates)
The holding period draws the tax line, and the threshold is 24 months.
|
Holding Period |
Tax Treatment |
|
Up to 24 months (short-term) |
Gain added to income and taxed at the applicable slab rate |
|
More than 24 months (long-term) |
12.5% flat, with no indexation benefit, for transfers on or after 23 July 2024 |
Note: Rates and computations shown are illustrative and reflect the law as generally applicable at the time of writing. Actual tax liability depends on individual facts, applicable cess and surcharge, and the provisions in force for the relevant assessment year.
Two details trip people up. The old 36-month threshold no longer applies; Budget 2024 cut it to 24 months for gold. And the 3% GST paid at purchase generally offers no tax relief here: it cannot be subtracted from the gain, and prevailing practice does not add it to the cost of acquisition either, a point worth confirming with a tax adviser where the amounts are large.
A worked example makes the long-term case concrete. Digital gold bought for ₹50,000 and sold for ₹65,000 after 30 months produces an LTCG of ₹15,000, taxed at 12.5%, which works out to ₹1,875 before cess. Had the same sale happened at 20 months, the ₹15,000 would instead be added to total income and taxed at the slab rate, so a person in the 30% bracket would owe ₹4,500 before cess on it. The holding period changes the bill considerably.
Documents to Keep Ready Before Filing
Four items cover the filing:
- Transaction statement from the digital gold platform showing purchase date, quantity, and price
- Sale confirmation with the sale date and proceeds
- PAN card
- Form 16, if salaried, for the ITR-2 pre-fill
The platform statement is the anchor document. Downloading it before starting the return avoids hunting through emails mid-filing.
Step-by-Step: How to Fill Schedule CG for Digital Gold in ITR-2
The portal walk-through runs as follows:
- Log in to the income tax e-filing portal and open ITR-2 for the relevant assessment year.
- Go to Schedule CG (Capital Gains).
- Under either Short-Term or Long-Term Capital Gains, depending on the holding period, select the row for assets other than listed securities or equity mutual funds. Digital gold belongs here, not in the equity rows.
- Enter the full sale consideration, the cost of acquisition (the purchase price), and the dates of purchase and sale, all taken from the platform statement.
- The portal computes the gain automatically once the figures are in.
- Verify the computed tax, pay any balance due, and proceed to submission and e-verification.
One reconciliation worry can be dropped. Digital gold sales attract no TDS, so there is no pre-filled TDS credit to match against the platform figures. The taxpayer computes and pays the tax directly. Multiple purchases sold together are entered with their respective costs and dates, so a platform holding statement that itemises each purchase lot saves real time here.
Conclusion
Reporting digital gold in ITR correctly needs only three decisions made in order. Confirm the holding period against the 24-month line, pick ITR-2 or ITR-3 based on whether business income exists, and enter the sale in Schedule CG under assets other than listed securities. The rates follow mechanically: slab rate for short-term gains, 12.5% without indexation for long-term transfers on or after 23 July 2024. Investors who hold physical gold alongside digital balances may note the practical difference the RBI directions draw between them: physical jewellery can be pledged for a gold loan when funds are needed, while digital gold balances cannot. Tax positions vary with individual facts, and figures here are illustrative, so consulting a qualified tax adviser before filing remains sensible where the situation is not straightforward.
Frequently Asked Questions
Which ITR form is used to report digital gold capital gains?
ITR-2 for most individuals. It applies where income includes salary and capital gains but no business income, and Schedule CG within it takes the digital gold entry. Taxpayers with business or professional income use ITR-3 instead, which carries the same schedule, while ITR-1 cannot be used at all since it has no place for such a sale. Switching from a pre-selected ITR-1 to ITR-2 on the portal happens at the form-selection stage, before any data entry, so the form decision comes first.
What is the holding period for long-term capital gains on digital gold?
More than 24 months. Digital gold held beyond that qualifies as a long-term capital asset, and gains on transfers made on or after 23 July 2024 are taxed at 12.5% flat with no indexation benefit, while anything sold at or under 24 months is short-term and taxed at the slab rate. The older 36-month rule sometimes quoted online is outdated. For holdings bought in instalments, the 24-month clock runs separately for each purchase lot, so part of a sale can be long-term while the rest is short-term.
Do I need to pay GST when I sell digital gold?
No. The 3% GST applies only at the time of purchase, not at sale, so selling triggers capital gains tax alone. The GST already paid cannot be deducted from the gain, and prevailing practice keeps it out of the cost of acquisition too, which surprises many filers. Keeping the original purchase invoice showing the gold price and GST separately helps in entering the correct acquisition cost.
Is there TDS on digital gold sales?
No. Platforms do not deduct tax at source when digital gold is sold, so the full proceeds arrive and the taxpayer computes and pays any capital gains tax directly through the return. Section 194Q, which concerns TDS on goods purchases, is a business-only provision and does not touch individual buyers or sellers of digital gold. Where the gain is sizeable, paying advance tax within the year helps avoid interest when the return is filed by the due date.
Can I set off a loss from digital gold against other capital gains?
Yes, within the usual rules. A short-term capital loss from digital gold can be set off against both short-term and long-term capital gains from other assets in the same financial year, while a long-term capital loss adjusts only against long-term gains. Unabsorbed losses can be carried forward for eight assessment years, provided the return is filed by the due date. The set-off entries sit in Schedule CFL of the return, so a loss year still needs the schedule filled to preserve the carry-forward.
Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more
