Gold ETF : Taxation

Mutual Fund Investors in general assume that long term capital gain is tax free. But the tax treatment varies for assets like Gold ETF's.

Investors need to note that the Long Term Capital Gains are tax free only for investments in equities and equity mutual funds. Even balance funds and International funds investing more than 60% in India enjoy this status.

But for all other mutual funds like Gold ETF's, Gold fund of funds and international funds investing more in other countires donot have this tax benefit.

For Gold ETF, the taxation are:

Gold ETFs held for less than a year attract short-term capital gains tax. This short term capital gain is added to total taxable income and taxed at highest marginal tax rate applicable to you . So if you fall in the 30 % tax bracket , you pay 30 % STCG , if you fall in the 10 % tax bracket , you pay 10 % STCG

If you hold gold ETFs for more than a year, you pay a long-term capital gains tax of 10 per cent without indexation or 20 per cent with indexation, whichever is lower, on the profits made.