Taxation of Gold ETF in India

Gold has been historically considered as an important asset class mainly for three reasons:

• Hedge against inflation
• Adds stability to the investment portfolio
• Asset Allocation avenue

Gold ETF has been a great investment avenue, especially in a sceniario where price of Gold are increasing day by day. Gold ETF also known as paper gold, Gold ETFs are mutual fund schemes that invest in standard gold bullion (99.5% purity). They are special types of exchange traded funds (ETFs) which tracks the prices of gold (i.e. whose value is based on price of gold) and are convenient and inexpensive alternative to owning physical gold.

Taxation of Gold ETF:
Many investors are confused in taxation of Gold ETF. Depending upon you investment duration ,Gold ETF in India are taxed under follwoing ways:

Short Term Tax
If you buy and sell a Gold ETF within a year then it would be taxed at normal rates

Long Term tax
If you buy and hold it for a year before selling then it would be considered as long term and will be taxed as 10% or 20% with Indexation (whichever is less).