Now Reading: Gold ETFs vs physical gold: tax difference explained
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Gold ETFs vs physical gold: tax difference explained
The Story in Brief
Gold ETFs qualify for long-term capital gains (LTCG) tax after a holding period of 12 months, compared with 24 months for physical gold, according to an analysis by ET Online. LTCG on both is taxed at 12.5% plus surcharge and cess, without indexation. Short-term gains are taxed at the investor's applicable income-tax slab rate.
Physical gold attracts 3% GST at the time of purchase, which gold ETFs do not. However, the ₹1.25 lakh annual LTCG exemption available for equity-oriented investments does not apply to gold ETFs. Selling personal old gold jewellery to a jeweller is generally outside the GST net, but capital gains tax may still apply.
Indian Opinion Analysis
The key difference is the holding period: ETFs need 12 months for LTCG, physical gold needs 24. The 3% GST on buying physical gold raises its effective cost, which narrows the net gain on sale. Inherited gold sellers need purchase documents to establish acquisition cost for calculating capital gains. The choice depends on whether the buyer wants jewellery or pure investment.
Source: economictimes.indiatimes.com
This brief was synthesised by AI from the source linked above. Methodology and corrections.
