Tax on Gold ETF in India: STCG, LTCG Rates and How to Calculate

The tax on Gold ETF units in India turns on a single question: how long did you hold them? Sell within 12 months, and the gain is added to your income and taxed at your slab rate as a short-term capital gain (STCG). Hold for more than 12 months, and the gain is taxed at a flat 12.5% as a long-term capital gain (LTCG), with no indexation. The 12-month threshold applies to units sold on or after 1 April 2025, following the Finance Act 2024. Gold ETF taxation in India also has a trap most investors miss: the ₹1.25 lakh LTCG exemption available on equity does not apply here.

A Gold ETF is a mutual fund scheme that holds gold on your behalf and lists its units on the NSE and BSE, so you buy and sell them through a demat and trading account exactly as you would a share. A Gold ETF holds at least 95% of net assets in physical gold and approved gold-related instruments, and the physical gold must be standard bars of 995 fineness (99.5% purity) meeting London Bullion Market Association Good Delivery Standards.

You never take delivery of metal. When you exit, you get money at the prevailing unit price. There are no making charges, no locker rent and no purity risk. From 1 April 2026, fund houses value that gold using polled spot prices published by Indian exchanges rather than an overseas benchmark, which makes daily unit prices track domestic gold rates more closely.

For tax purposes, a gold ETF is a non-equity fund, so it gets none of the concessions built for equity. But because its units are listed, it qualifies for the shorter 12-month long-term holding period that applies to listed securities.

That 12-month treatment is recent. Until FY 2024-25, Gold ETFs were caught by the "specified mutual fund" rule in Section 50AA, which taxed the whole gain at slab rates,, however long you held the units. The Finance Act 2024 narrowed that definition to debt-oriented funds with effect from FY 2025-26, which brought Gold ETFs back into the normal listed-security rules. Budget 2026 left all of this untouched, so the same two rates apply in FY 2026-27. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbers the relevant provision; Section 112 becomes Section 197, without changing the rate.

Any exit is a taxable event, and that includes moving money between fund houses. If you sell one AMC's Gold ETF and buy another's, that is a sale followed by a fresh purchase, not a transfer: the gain on the first ETF is taxed in that year and the holding period on the new units starts from zero. Investors who reshuffle for a slightly lower expense ratio often trigger STCG without realising it. Where you have bought in instalments, units are treated as sold oldest-first, so each lot carries its own purchase price and holding period.

STCG arises when you sell Gold ETF units within 12 months of buying them. The gain is added to your total income for the year and taxed at whatever slab rate applies to you. There is no separate flat rate and no indexation. The 20% STCG rate you may have read about applies only to listed equity shares and equity-oriented funds, not to gold.

Take a straightforward case. You invest ₹1,00,000 in a gold ETF, sell nine months later for ₹1,15,000, and book a gain of ₹15,000. Here’s how that gain is taxed at three different marginal rates:

The same gain therefore costs a reader in the highest bracket six times what it costs someone in the 5% bracket. Under the new tax regime, the slabs run in narrower bands ; 5% from ₹4 lakh, 10% from ₹8 lakh, 15% from ₹12 lakh, 20% from ₹16 lakh, 25% from ₹20 lakh and 30% above ₹24 lakh ; so check which band your gain actually lands in rather than assuming your headline rate.

One point works in your favour here. Because Gold ETF STCG is ordinary slab income, the Section 87A rebate can still absorb it. If your total income, including the gain, stays within the Under the new regime, if your income is ₹12 lakh, the rebate of up to ₹60,000 can leave you with no tax to pay. That is not true of LTCG, as the next section explains.

In your return, this gain is to be shown under the head 'Capital Gains', not 'Income from Other Sources'.

1. Note your cost of acquisition, that is the price you paid for the units plus the brokerage on that purchase.
2. Note your sale value, and reduce it by the broking and charges paid on the sale.
3. Subtract the cost from the net sale value to get the gain.
4. Add that gain to your total income from salary, business, interest and other sources.
5. Apply your slab rate to the combined income, then add 4% health and education cess on the tax.

Also Read: Capital Gains Tax on Gold in India

Hold your units for more than 12 months, and the gain becomes long-term, taxed at a flat 12.5% with no indexation benefit. The 12.5% rate has applied to transfers made on or after 23 July 2024 under the Finance Act 2024; for Gold ETFs, the 12-month qualifying period applies to units sold on or after 1 April 2025.

Say you invest ₹3,00,000 and sell 14 months later for ₹4,20,000. The gain is ₹1,20,000, the tax at 12.5% is ₹15,000, and with 4% cess, the final liability is ₹15,600.

Now, this is the part that catches people out. The ₹1.25 lakh annual LTCG exemption- the one that lets equity investors book gains tax-free- sits in Section 112A (Section 198 of the Income-tax Act, 2025), which covers only listed equity shares, equity-oriented mutual funds and business trust units where securities transaction tax has been paid. A Gold ETF meets none of those conditions. So on that ₹1,20,000 gain, an equity fund investor would have paid nothing, while the gold ETF investor pays ₹15,600. Every rupee of Gold ETF LTCG is taxable from the first rupee.

Two related rules are worth knowing. If you are a resident and your other income is below the basic exemption limit (₹4 lakh under the new regime), the unused part of that limit can be set against your LTCG before the 12.5% is applied. But the Section 87A rebate cannot: from FY 2025-26, the Finance Act 2025 expressly bars the rebate against income taxed at special rates, including LTCG, even if your total income is under ₹12 lakh.

The 12.5% is never the whole bill. Health and education cess of 4% applies on the tax in every case. Surcharge kicks in only if your total income crosses ₹50 lakh, and for long-term capital gains it is capped at 15%; however, the higher your income goes.

So even a high earner pays under 15% on Gold ETF LTCG, against a marginal slab rate of 30% plus surcharge on short-term gains. Waiting past the 12-month mark is usually the single biggest lever you have.

1. Confirm the gap between your purchase and sale dates is more than 12 months.
2. Work out the gain: net sale value minus cost of acquisition.
3. Apply 12.5% to that gain; no indexation, and no ₹1.25 lakh deduction.
4. Add surcharge if your total income exceeds ₹50 lakh; then 4% cess on the tax.
5. Report the gain under Schedule CG in ITR-2 or ITR-3, in the Section 112 block.

The Gold ETF's edge is the clock. Twelve months against 24 for physical gold and gold mutual funds means a medium-term holder reaches the 12.5% rate a full year earlier. The gold mutual fund comparison surprises people because a gold fund of funds simply buys Gold ETF units, which are the same underlying metal. The difference is in how they are listed: ETF units trade on an exchange and have a 12-month holding period, while fund-of-fund units trade on an exchange and have a 24-month holding period.

On the purchase side, buying Gold ETF units attracts no GST, while physical gold carries 3% GST on the metal and 5% on making charges before you have earned anything.

Sovereign Gold Bonds changed materially this year. From 1 April 2026, the capital gains exemption on redemption applies only to an investor who subscribed at the original RBI issue and held the bond continuously until its 8-year maturity. Buy an SGB on the secondary market and hold it to maturity, or redeem early even after the five-year window, and the gain is now taxable. The 2.5% annual interest was always taxable at slab rates and remains so.

Gold ETF gains mean you cannot use the simple forms. You will need ITR-2 if you have no business or professional income, or ITR-3 if you do. ITR-1 and ITR-4 cannot carry these gains, even small ones.

Inside the return, both figures are reported in Schedule CG. Short-term gains are reported in the block for short-term gains taxed at the applicable rates, not in the special-rate equity block. Long-term gains go into the Section 112 block; Section 197 for FY 2026-27 onwards under the Income-tax Act, 2025.

Reconcile before you file. Your Annual Information Statement and Form 26AS will show the transaction reported by the broker or depository, and a mismatch with your numbers is a common reason for a notice. Download your broker's capital gains statement, and keep the purchase contract notes: they are your proof of cost of acquisition if the cost is ever questioned.

No TDS is deducted for resident investors when Gold ETF units are sold on an exchange, so the entire tax comes out of your pocket through advance tax or self-assessment tax. Plan for it rather than discovering it in July. Non-residents are treated differently and should take specific advice.

If you sold at a loss, it is still worth reporting. Short-term capital losses can be set against both short-term and long-term gains; long-term losses can only be set against long-term gains. Either can be carried forward for eight years, but only if you file your return by the due date. For FY 2025-26, that date is 31 July 2026 for ITR-2 filers and 31 August 2026 for non-audit ITR-3 filers, unless the CBDT extends it.

Also Read: GST on Gold in India