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Understanding ETF Taxation in India: A Simplified Guide in 2025

What are ETFs?

ETFs are baskets of assets that trade on an exchange, much like an individual stock does. These baskets may track a wide range of indices/commodities such as the Nifty 50 or Gold/Silver etc.

You can buy and sell an ETF anytime, just like a stock.

How are ETFs taxed in India?

The taxation of Exchange Traded Funds (ETFs) has undergone a significant overhaul following the Union Budget in July 2024. The new rules have introduced distinct holding periods and tax rates depending on the underlying asset class of the ETF—Equity, Debt, or Gold.

Below is the updated and rephrased guide, including a dedicated table to capture the specific taxation rules for ETF.

ETF Category

Underlying Asset

Holding Period for LTCG*

STCG

LTCG

Equity ETFs

>65% Domestic Equity

> 12 Months

20%

12.5% (Gains > ₹1.25 Lakh exempt)

Gold / Silver ETFs

Physical Gold/Silver

> 12 Months

Slab Rate

12.5% (No indexation)

Debt ETFs

>65% Debt Instruments

N/A (Always Short Term)**

Slab Rate

N/A (Taxed at Slab Rate)

*LTCG = Long-Term Capital Gains | STCG = Short-Term Capital Gains
**Applies to Debt ETFs purchased on or after April 1, 2023.
Surcharge and Education Cess would also be levied

How are Equity ETFs taxed?

Equity ETFs are treated on par with Equity Mutual Funds.

  • Short-Term (< 12 Months): If you sell your units within a year, the gains are taxed at a flat rate of 20% (increased from the previous 15%).
  • Long-Term (> 12 Months): Gains from units held for more than a year are taxed at 12.5%. However, an exemption applies to the first ₹1.25 Lakh of long-term gains across all your equity assets in a financial year.

How are Gold and Silver ETFs taxed? 

  • Holding Period: The holding period for LTCG is reduced to 12 months.
  • Taxation: Short-term gains are taxed at slab rates, while long-term gains (held >12 months) are taxed at 12.5%.

How are Debt ETFs taxed?

These ETFs invest more than 65% of their proceeds in debt and money market instruments.

  • Tax Rule: For investments made after April 1, 2023, gains are treated as Short-Term Capital Gains (STCG) regardless of the holding period.
  • Rate: All gains are added to your income and taxed according to your income tax slab.

Conclusion 

The 2025 tax regime has standardized the holding period for most listed ETFs (Equity, Gold) to 12 months, simplifying portfolio tracking for investors. While Equity ETFs retain a slight edge with the ₹1.25 Lakh exemption, commodity ETFs have become more attractive due to the reduced holding period for long-term classification. 

Disclaimer - 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.

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

Published on Dec 3rd, 2025

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