Gold ETF - Taxation 2025

Gold has always had a special place in Indian households. And that’s where Gold ETFs come in. They make owning gold easy, transparent, and liquid. But before investing, it’s important to understand how gold ETFs are taxed in 2025, because taxation directly affects your real returns.

Understanding Gold ETFs and How They Work

A gold ETF (Exchange-Traded Fund) is a mutual fund scheme that invests in physical gold of 99.5% purity. 

You can buy or sell gold ETFs on major stock exchanges such as NSE or BSE or broker platforms, just like stocks. When gold prices go up, the value of your ETF unit rises too, though it may vary slightly due to tracking error or fund expenses. When you sell the units, you get the cash equivalent of the units redeemed, and not physical gold. 

Here’s what works for gold ETF investments:

  • You avoid making charges and storage hassles that come with physical gold.
  • Prices are uniform across India.
  • You can invest small amounts and trade anytime during market hours.
  • It’s fully transparent; you can check daily NAV and holdings online. 

How are Gold ETFs taxed in India - 2025?

Types of Tax

Holding Period

Tax Rate

Indexation

Short-Term Capital Gains (STCG) Tax

12 months or less

As per the income slab

Not available

Long-Term Capital Gains (LTCG) Tax

More than 12 months

12.5% (flat rate)

Not available

Short-Term Capital Gains (STCG) - Gold ETFs

If you sell your gold ETF within 12 months, the gain is considered a short-term capital gain. These gains are added to your total income and taxed according to your income tax slab. 

Example:

Suppose you bought gold ETF units worth Rs. 2,00,000 in May 2025 and sold them in November 2025 for Rs. 2,40,000. 

  • Your gain is Rs. 40,000.
  • If you fall under the 20% income tax slab, you will pay Rs. 8,000 as tax (20% of Rs. 40,000)

No separate indexation or flat rate applies here, just your income tax slab rate. 

Long-Term Capital Gains (LTCG) - Gold ETFs

If you sell your gold ETF after 12 months, it’s treated as long-term capital gains. As per the new rule, LTCG on gold ETF India is taxed at a flat 12.5% without indexation. 

Example:

Hypothetically, let’s say you bought Rs. 3,00,000 worth of gold ETF units in Sep 2024 and sold them in Oct 2025 at Rs. 4,20,000. 

  • Your gain is Rs. 1,20,000.
  • You will pay Rs. 15,000 as LTCG tax (12.5% of Rs. 1,20,000)

Comparison Chart: Sovereign Gold Bond vs Gold ETF vs Physical Gold Taxation

Aspect

Gold ETF

Sovereign Gold Bond (SGB)

Physical Gold

Form

Electronic (Demat)

Bond issued by the RBI

Coins, bars, jewellery

Purity

99.5%

999 purity (24k)

Varies

Storage and safety

Safe as digitally stored, no handling needed

Safe, RBI-backed

Risk of theft or damage

Returns

Tracks the domestic price of physical gold

Gold price + 2.5% interest yearly

Based on the resale price

STCG Tax

Slab rate (≤12 months)

Slab rate (≤3 years)

Slab rate (≤24 months)

LTCG Tax

12.5% flat (>12 months)

Exempt if held till maturity

12.5% flat (>24 months)

GST

Exempt

Exempt

3% on gold + 5% on making charges


What are the advantages and disadvantages of Gold ETFs?

Advantages

  • Easy Trading: Gold ETFs are digital, and easy to trade, making them convenient for investors who prefer paperless transactions. 
  • Transparent Pricing: One of the significant gold ETF investment benefits is that its value directly tracks the market price of gold across India, ensuring full price clarity. 
  • High Liquidity: Gold ETFs allow investors to buy or sell units anytime during market hours without hassle. 
  • Loan Collateral: These units can be used as collateral for loans, offering flexibility during financial needs. 

Disadvantages

  • No Indexation Benefits: After April 2025, gold ETFs no longer qualify for indexation benefits, which slightly reduces post-tax advantages. 
  • Tracking Errors: Gold ETFs may not perfectly match the actual domestic price of physical gold. 

Who Should Invest in Gold ETFs?

A gold ETF investment suits those who want:

  • Exposure to gold without physical storage.
  • The ability to buy or sell anytime during market hours.
  • Portfolio diversification. 
  • Transparent pricing, no making or wastage charges. but with an applicable expense ratio).

To Sum it Up

Gold ETFs are a simple way to own gold without lockers, wastage, or purity worries, while remaining exposed to market-price volatility. The gold ETF taxation rules in 2025 are straightforward: short-term gains are taxed as per your slab, and long-term gains are taxed at a flat 12.5% without indexation. 

If you prefer liquidity and convenience, gold ETFs fit well. However, if you prefer a longer lock-in period and tax-free gains at maturity, you may consider Sovereign Gold Bonds. However, there are no new issues of SGBs as of now.



Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

The discussion on Gold ETF taxation in this blog is based on the provisions of the Income-tax Act, 1961 and the rules, notifications, and judicial/administrative interpretations available at the time of writing. While reasonable care has been taken to ensure accuracy, readers are advised not to rely solely on this material for making tax decisions. The applicability of tax provisions may vary based on individual facts and circumstances, and tax laws are subject to amendments and periodic changes.

Readers should consult their tax advisor or qualified professional for guidance specific to their situation. Neither the author nor the publisher shall be responsible for any loss or liability arising directly or indirectly from the use of, or reliance on, the information contained herein. 

Published on Dec 11th, 2025

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