Tax implication on Gold ETF, Gold FOF, E-gold and gold in physical form

Tax implication on Gold ETF, Gold Fund of Fund,  E-gold and gold in physical form

Tax implication on Gold Fund of fund and Gold ETF

 The Gold ETF or Gold Fund of Fund (gold savings fund which invest in gold etf) is classified under mutual fund and will be taxed as per non equity mutual fund taxation rules. 
  

Gains from Gold ETF will have the same treatment as Debt MFs.

Investor investing in Gold ETF need not pay wealth tax. 

 Long Term Capital Gains - if held for more than a year

LTCG of Gold ETFs and gold FoFs are taxed at 10% without indexation and 20% with indexation which ever is lower.

 Short Term Capital Gains - if held for less than one year

 STCG and taxed as per individual income tax slabs.

Investor has to pay taxes after redemption as per the tax laws applicable for non equity mutual fund. But, when the Gold ETF is redeemed for physical gold the taxation rules will be similar to that of physical gold.

Tax implication on e-gold

The e-Gold units will be treated as Gold for tax purposes. The units should be held for more than 36 months for availing the confessional tax treatment accorded to long term capital gains and for exemption eligibility under Section 54 F or 54 EC of Income Tax Act, 1956

You also need to factor in wealth tax implications. Gold and silver bars and coins as well as jewellery are liable to wealth tax.  You will  have to pay wealth tax on the market value of the electronic units lying in your account as on March 31 of each year, if the total value of your taxable wealth together with market value of e-Gold exceeds Rs 30 lakh.

The tax payable being 1% of the market value of the assets exceeding Rs. 30 lakh. Such tax is payable each year on the assets so held as on 31 March of that year.

 

Also refer

Tax implications on Fixed Maturity Plans
Tax Implications on mutual Fund Gains