Tax on gold ETF in India is charged as capital gains when you sell your units. Gains on units held for 12 months or less are added to your income and taxed at your slab rate; gains on units held for more than 12 months are taxed at a flat 12.5% without indexation. A 4% health and education cess applies to both, and surcharge can apply at higher incomes. These rules come from the Finance (No. 2) Act 2024 and continue unchanged for FY 2026-27 under the Income-tax Act, 2025.
A gold ETF (exchange-traded fund) is a mutual fund scheme that holds physical gold of 99.5% purity and trades on the NSE and BSE like a share. For tax purposes it is a listed, non-equity capital asset, and that classification is behind every figure in this guide.
Gold ETF Taxation in India Explained
Gold ETF taxation in India falls under the capital gains provisions of the Income Tax Act. When you sell units on the exchange, or redeem them with the fund house, the difference between your sale value and your purchase cost is a capital gain, and the holding period decides whether that gain is short-term or long-term.
Two classifications drive every rate that follows. Gold ETF units are listed securities, so they get the 12-month long-term threshold that listed assets receive; physical gold runs on a 24-month clock. They are also non-equity assets, because the fund holds bullion rather than domestic shares. The equity regime, with its special 20% STCG rate, ₹1.25 lakh LTCG exemption and Securities Transaction Tax (STT), does not apply to them.
Tax arises only on sale. A rise in NAV while you hold the units creates no liability, and no TDS is deducted from sale proceeds for resident investors. You settle the tax yourself, through advance tax where applicable and your income tax return.
Gold ETF Tax Rate: STCG vs LTCG
The gold ETF tax rate has two settings, and the only variable that moves you between them is how long you held the units before selling.
A 4% health and education cess is added to the tax in both cases, and surcharge applies once total income crosses the relevant thresholds. Rates reflect the law in force for FY 2026-27; tax positions vary by individual, so confirm large computations with a qualified adviser.
Short-Term Capital Gains (STCG) on Gold ETFs
Sell within 12 months and the gain joins your total income for the year and is taxed at whatever slab you fall in. There is no special short-term rate for gold ETFs. That makes the short-term bill highly variable across investors: someone whose total income sits below the basic exemption limit pays nothing on the gain, while an investor in the 30% slab pays over 31% once cess is added.
Long-Term Capital Gains (LTCG) on Gold ETFs
Hold for more than 12 months and the gain is taxed at 12.5% regardless of your slab. Indexation, which used to inflate your purchase cost in line with the Cost Inflation Index, is no longer available, so the effective long-term rate with cess is 13%. The flat rate is what makes the 12-month line valuable for upper-slab investors: the same rupee gain is taxed at well under half the rate once it turns long-term.
How Is Gold ETF Capital Gains Tax Calculated?
Gold ETF capital gains tax has two inputs, and the same working applies whether you call it capital gain tax on gold ETF or simply tax on gold ETF gains: the capital gain, which is sale value minus purchase cost (including brokerage on both legs), and the rate that applies to your holding period. No inflation adjustment enters the working, so the arithmetic stays short.
STCG Example: Capital Gain Tax on Gold ETF Sold Within 12 Months
You buy gold ETF units for ₹50,000 in August 2025 and sell them for ₹58,000 in March 2026, a seven-month hold. The ₹8,000 gain is short-term.
The same ₹8,000 gain costs ₹2,496 for an investor in the 30% slab. In short-term treatment the slab does all the work, which is why two investors selling identical units on the same day can owe very different amounts.
LTCG Example: Units Sold After 12 Months
You buy units for ₹1,00,000 in January 2025 and sell them for ₹1,30,000 in February 2026, a 13-month hold. Crossing the 12-month line makes the ₹30,000 gain long-term.
Had you sold one month earlier, the same ₹30,000 would have been short-term: ₹6,240 all-in at the 20% slab, or ₹9,360 at 30%. Surcharge is excluded from both examples.
Pro Tip: Check the purchase date before placing a sell order near the 12-month mark; one extra month can cut a 30%-slab investor's tax on a ₹30,000 gain from ₹9,360 to ₹3,900.
If you sell at a loss, the capital loss can be set off against other capital gains in the same year and carried forward, generally for up to eight years, provided you file your return by the due date. A long-term loss can only be set off against long-term gains; a short-term loss can be set off against either.
Finance Act 2024 Changes to Gold ETF Tax
The Finance (No. 2) Act 2024 rewrote capital gains across asset classes with effect from 23 July 2024. For gold ETFs it cut the long-term clock from 36 months to 12 and replaced the 20%-with-indexation rate with a flat 12.5%.
The transition had a rough patch. From 1 April 2023, Section 50AA deemed gains on "specified mutual fund" units, defined by low domestic equity exposure, to be short-term regardless of holding period, and gold ETFs were caught by that definition. The 2024 Act narrowed the definition to funds holding more than 65% in debt and money-market instruments, with effect from FY 2025-26. Gold ETF units sold on or after 1 April 2025 therefore follow the 12-month rule whatever their purchase date, while units sold between 1 April 2023 and 31 March 2025 were taxed at slab.
Important: The sale date, not the purchase date, decides whether the Section 50AA transition applies: units bought in 2024 and sold in 2026 get the 12-month, 12.5% treatment.
The Income-tax Act, 2025, in force since 1 April 2026, carries these rates forward without change, though section numbers and the "tax year" label replace the older references you will see in most calculators. Union Budget 2026 left the gold ETF rates and holding periods untouched.
Gold ETF vs Physical Gold vs Sovereign Gold Bond: Tax Comparison
All three formats now share the 12.5% long-term rate. The differences sit in the holding period, the taxes paid on the way in, and what happens at maturity.
Gold ETFs have the shortest long-term clock of the three, half the 24 months physical gold needs, at the same rate. Physical gold also carries 3% GST on the metal and 5% on making charges at purchase, a cost that no exchange-traded wrapper pays.
Sovereign Gold Bonds used to be the clear tax winner for patient investors because the capital gain at maturity was exempt for individuals. Budget 2026 narrowed that from FY 2026-27: the exemption now applies only if you subscribed at the original RBI issue and hold until maturity. Secondary-market buyers and early redeemers pay 12.5% LTCG, or slab if held 12 months or less, and the 2.5% annual interest was always taxable at slab. With no fresh SGB issuance, most new SGB exposure is bought on the secondary market, so the ETF's tax edge over SGBs is larger than older comparisons suggest.
Gold CFDs, such as the XAUUSD contracts available on TMGM, are a separate instrument that tracks the gold price without holding units, and they fall outside the capital gains framework described here; their tax treatment is not covered in this guide. CFD trading involves significant risk and is not suitable for all investors. You could lose more than your initial deposit.
How to Save Tax on Gold ETF in India
Gold ETFs have no Section 80C deduction. Unlike an ELSS fund, buying units does nothing to reduce your taxable income; the only tax levers are on the sale side.
Cross the 12-month line. Moving a gain from slab to 12.5% is the single largest saving available, and it costs nothing but patience.
Set off and carry forward losses. A realised loss on gold ETF units can offset gains elsewhere in your capital gains schedule, and unused losses carry forward if you file on time.
Track SIP instalments separately. Each instalment has its own purchase date and its own 12-month clock. Units are matched on a first-in, first-out basis when you sell, so partial redemptions of an older SIP usually release the oldest, long-term units first.
Pick the financial year of sale. Tax falls in the year the sale settles. Selling in early April rather than late March moves the liability, and the advance-tax instalments that come with it, into the following year.
Base the decision to hold or sell on your allocation and your view on gold first. A tax saving of a few thousand rupees is a poor reason to keep a position you would otherwise close.
Common Gold ETF Tax Mistakes to Avoid
Most errors come from treating gold ETFs like equity ETFs or from using rules that stopped applying in 2024.
Filing under the equity schedule. Gold ETF gains do not qualify for the ₹1.25 lakh LTCG exemption or the 20% equity STCG rate. Parking them in the equity section of Schedule CG understates your tax.
Treating unrealised gains as taxable, or unrealised losses as deductible. Only a sale creates a gain or loss for tax purposes.
Assuming a switch between gold ETFs is tax-free. Selling one gold ETF to buy another is a sale followed by a purchase. The gain is taxed and the holding period restarts from the new purchase date.
Leaving cess and surcharge out of the maths. The advertised 12.5% is 13% after cess and higher again with surcharge; net-return estimates that ignore this run high.
Using old calculators. Any tool that applies a 36-month threshold or indexes your cost is working from pre-2024 law.
Expecting TDS to have covered it. Nothing is deducted at source for residents, so the full liability is yours to pay through advance tax or self-assessment tax.
How to Report Tax on Gold ETF in Your ITR
Gold ETF gains go under Schedule CG of your return for the financial year in which the sale took place.
Short-term gains belong under short-term capital gains on assets other than the equity, STT-paid categories, because gold ETFs are not equity-oriented funds.
Long-term gains go under the corresponding long-term "others" head taxed at 12.5%.
Form choice: individuals with capital gains and no business income generally file ITR-2; those with business income file ITR-3.
Source documents: the capital gains statement from your broker or fund house lists purchase dates, costs and sale proceeds, and its figures transfer almost line by line into the schedule. Keep the contract notes as backup.
If your total tax liability for the year exceeds ₹10,000 after TDS on other income, advance tax instalments apply, and a large gold ETF gain can push you over that line. Non-resident investors face different rules: TDS may be deducted on redemption, and treaty relief requires a Tax Residency Certificate and Form 10F.
Frequently Asked Questions
What is the tax on gold ETF in India if I sell after 12 months?
A flat 12.5% on the gain, plus 4% cess, with no indexation. Indexation was removed for gold ETFs by the Finance (No. 2) Act 2024, so both short-term and long-term gains are computed on the raw difference between sale value and actual purchase cost, and the lower 12.5% flat rate is the trade-off the law offers in exchange. For units bought many years ago at a low cost, the loss of the inflation adjustment can matter, so run the numbers on actual cost rather than an indexed figure from an older calculator.
How is gold ETF tax different from equity ETF tax?
Both use a 12-month holding period and a 12.5% long-term rate, and that is where the similarity ends. Equity-oriented ETFs pay STT, get a ₹1.25 lakh annual LTCG exemption, and have short-term gains taxed at a special 20% rate. Gold ETFs pay no STT, get no exemption threshold, and have short-term gains taxed at your slab. The two also sit in different heads of Schedule CG.
Is TDS deducted when you sell gold ETFs?
Not for resident investors. Sale proceeds arrive in full, and you pay the tax yourself through advance tax during the year or self-assessment tax before filing. Non-residents may have TDS deducted under Section 195 on redemption and should check whether a tax treaty reduces the rate.
