Gold ETF India: How Much Tax Do You Have To Pay On Your Investment?

Gold exchange-traded funds (ETFs) have become a lucrative option for investors amid the skyrocketing price of gold due to geopolitical tensions and market uncertainty. Assets Under Management of Gold ETF witnessed a slight decline in February but continued to remain at record levels. Those who are planning to invest in gold ETFs in long run must understand the tax gold ETF investment can attract in long run.

Investment in gold ETF attract capital gains tax based on the duration for which investors have invested their money in the instrument. THere are two types of capital gains tax, long term and short term.

Glittering growth of gold ETFs

According to the Association of Mutual Funds in India (AMFI), AUM of gold ETFs have nearly doubled in the last year. In February 2025, AUM of gold ETF jumped by 95% to Rs 55,677 crore against Rs 28,529 crore in the same period last year.

What are gold ETFs?

Gold exchange traded funds (ETFs) are passive investment instruments that aim to track growth of gold. These ETFs perform like individual stocks and are traded on the stock exchanges.

Taxation on gold ETFs

Taxation on income or profit earned from gold ETFs is similar to what people have to pay when they sell physical gold. Profits earned from gold ETFs attract capital gains tax.

Short term capital gain (STCG) tax

Investors are liable to pay short-term capital gain tax on gold ETFs if they hold the investment for less than a year. In this case, income earned from gold ETFs (or any other ETFs) will attract an STCG of 20%.

Long-term capital gain (LTCG) tax

Investors who are holding gold ETFs for 12 months or more are required to pay a long-term capital gain (LTCG) tax at 12.5% on their profit. Investors must note that there is no more benefit of indexation on gold investments after Budget 2024, hence they will not get any indexation benefit that were earlier applicable on LTCG.

Gold price breach $3,000 mark

The AUM of gold ETF grew significantly as gold prices shot significantly amid fears of trade war and rising stock market volatility. In international market, spot gold crossed the psychological $3,000 per ounce mark for the first time on 14 March 2025 in a historic safe haven rally. Gold prices in India have been shattering records over the past two months.

Gold price in India reach record high

Gold prices have been hitting record highs this year, largely driven by concerns over a potential global economic fallout stemming from Donald Trump's trade policies, prompting investors to flee from risky assets toward safer havens, fueling a sustained rally in gold.

Gold prices in India jumped to a record high of Rs 89,780 ( for 24 carat/10 gram) on March 14, Holi, as investors continued to show their interest towards the yellow metal against a volatile market.

Gold prices have been hitting record highs this year mainly due to concerns of a potential global economic fallout stemming from US President Donald Trump's strict stance on trade tariffs and import bans. His trade policies and other factors have prompted several investors to flee from risky assets toward safer havens, fuelling a sustained rally in gold.