Investment in Gold ETF comes under Section 80C Tax rebates?

Investment is Gold ETF fund or Gold Savings fund (fund of fund)does not qualify for tax benefit under section 80C of Income tax Act.

Now  question arise which mutual fund schemes gets tax benefit(deduction under section 80C)??

Deduction under 80C is available in following mutual fund schemes:

1. ELSS Funds  
Equity Linked Savings Schemes will qualify for tax benefit under  Section 80C of Income Tax Act. More so  when you invest in ELSS Scheme, amount is locked in for 3 Full years, even when you do SIP in ELSS Fund each SIP and (dividend which is reinvested, if you opted for dividend reinvestment option)  is also locked  in  for 3 years.

How Lock in Period works in ELSS fund is explained in this link

Explain Lock in Period if investment is in ELSS Funds Through SIP (Systematic Investment Plan)

2. Pension Plans of mutual funds

 Earlier Pension Plans schemes of mutual fund qualified for a tax rebate under section 88 of the Income Tax Act 1961. From 1st April 2005, in terms of Section 80C(7) of the Act, a pension fund referred to u/s 88 shall be eligible for deduction u/s 80C of the Income Tax Act, 1961. All Subscription in Pension Plan is locked in for 3 years.

So when you invest in ELSS funds or Pension funds of mutual funds, you qualify for deduction under section 80C.

Now your second question: how gold ETF funds are taxed??

The tax system for gold ETFs is similar to that of non-equity mutual funds like debt funds. When computing income tax, gold exchange traded funds are treated as debt funds. 

   

Long Term Capital Gains (Hold for more than a year)

Arising from the sale of  Gold ETF or Gold Savings Fund (fund of fund)

 

10% on the capital gain without the benefit of indexation.

20% on the capital gain after including the impact of indexation.

Whichever is lower, on the profits made?

So, 11.33 per cent without indexation or 22.66 per cent with indexation which ever is lower

(The investor is also liable to pay the applicable surcharge, if any and other cess on the tax.)

Short Term Capital Gains (Hold for less than a year)

 Arising from the sale of Gold ETF or Gold Savings Fund (fund of fund)

The short-term capital gain on debt schemes is clubbed with the income (added to your annual income) of the investor and is taxed at the slab rate.

The investor is also liable to pay the applicable surcharge, if any and other cess on the tax.

 

How Gold funds are treated from tax point of view???

Is their any tax rebate if we invest in Gold Savings Fund, If yes, under  income tax act which section to claim gold savings fund ?How Gold fund are treated from tax point of view???What will be benefits to investor, if one opted for Gold Savings Fund (FOF)?

Gold Savings Fund FOF) currently don't offer any tax rebate or deduction under Income tax act.

When computing income tax, gold ETFs and gold savings funds (FOF) are treated as debt funds, not equity.  Tax treatement will be similar to debt funds and therefore will not attract wealth tax which is in case of physical gold.

On redemption, the units of gold ETFs and gold savings funds (FOF) held for more than a year qualify for a long-term capital gain tax of 11.33 per cent without indexation or 22.66 per cent with indexation.


If you have made a short-term gain, which applies when the holding is less than a year, the short-term capital gain will be clubbed with the income of the individual investor, to be taxed in line with the applicable tax slab of the investor.


So, the short-term capital gains will get added to your income and be taxed as per the income bracket you fall under.

 Tax Treatment of Gold Savings Fund:

 Long Term Capital Gain Tax of 10 % or 20 % with indexation will be applicable

 Short Term Capital Gains applicable as per tax slab for the investor

   

Also check

How you can Invest in Gold ETF Funds

 Best Gold Exchange Traded Funds

Tax treatment for Gold ETF

The 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. 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.

 Short Term Capital Gain Tax -------------------As per Income Tax Slab

Long Term Capital Gain Tax------------------------Less of 10% without indexation or 20% with indexation which ever is lower +3%cess

Dividend Distribution Tax-------------------------**13.519 (2011-12)
**Dividend Distribution Taxes indicated above are inclusive of additional surcharge and cess.

Also refer

How Gold funds are treated from tax point of view???

 http://mutual-funds-personalfin.blogspot.in/2012/03/how-gold-fund-are-treated-from-tax.html