InvestorQ : How are gold mutual funds and gold ETFs taxed?
Suhani Mirza made post

How are gold mutual funds and gold ETFs taxed?

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Anusha Savla answered.
2 years ago
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Let’s first understand the difference between the two investment options.

Gold funds, in simple English are mutual funds that invest in gold ETFs. This means if you pay a mutual fund company an amount to invest in a gold fund, then the mutual fund house will park your money in gold EFTs and give you the corresponding number of units.

Gold funds are the best performing funds when there’s uncertainty in the market. So, anyone who wants to beat long-term inflation and make his/her money grow in a diversified manner should opt for gold mutual funds.

Gold ETFs, in contrast, are open-ended mutual fund schemes that invest only in gold. Gold ETFs are treated as non-equity investments and are taxed accordingly.

Gains from sale of gold ETFs or gold mutual funds are taxed similarly as that of the physical gold. Short-term capital gains on units held for less than 36 months is added to investor's income and taxed according to the applicable slab rate. Long-term capital gains on units held for more than 36 months are taxed 20.8% (including cess) with indexation benefits.

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