India Gold ETF Gains for NRIs: How Much Tax Applies? Key Rules and Exemptions Explained

Gold holds a significant place in Indian savings, and many NRIs prefer Gold ETFs due to their simplicity. However, understanding the tax implications is crucial. This article explains the tax rules for NRIs on Gold ETF gains in India, covering the post-July 23, 2024, capital gains framework and changes effective from April 1, 2025. 

Understanding Gold ETF Taxation for NRIs 

An Indian Gold ETF is a listed mutual fund unit that tracks gold prices and is treated as a capital asset under the Income-tax Act. The profit on sale is considered capital gains, which are classified into short-term capital gains (STCG) and long-term capital gains (LTCG) based on the holding period. 

The key dates to note are April 1, 2023, when Section 50AA introduced a deeming rule for certain mutual funds, July 23, 2024, when the LTCG framework changed, and April 1, 2025, when the definition of "Specified Mutual Fund" becomes narrower. 

Tax Rules for NRIs Selling Gold ETFs from April 1, 2025 

The holding period determines the tax treatment: STCG applies if held for 12 months or less, taxed at the slab rate, while LTCG applies if held for more than 12 months, taxed at 12.5% under Section 112, without indexation, plus surcharge and cess. 

The ₹1,25,000 LTCG exemption does not apply to Gold ETFs, as it is tied to Section 112A, covering listed equity shares and equity-oriented mutual fund units, which Gold ETFs do not fit. 

Read More: Top Gold ETFs for 2026 Based on 1 Year Returns! 

Considerations for Sales Before April 1, 2025 

If you bought Gold ETFs after April 1, 2023, and sold them before April 1, 2025, gains might be treated as short-term due to Section 50AA. From April 1, 2025, the "Specified Mutual Fund" definition becomes debt-heavy, reducing the reach of Section 50AA. 

TDS and DTAA for NRIs 

When selling Gold ETFs on the exchange, TDS may not be separately listed, but tax liability exists. For off-exchange redemptions, TDS mechanics under Section 195 apply. NRIs can explore DTAA benefits, requiring a Tax Residency Certificate (TRC) and Form 10F, but must file returns for any India-side TDS. 

Conclusion 

For NRIs, Gold ETF gains in India are taxed at slab rates for STCG and 12.5% for LTCG without indexation from April 1, 2025. The ₹1,25,000 LTCG exemption does not apply to Gold ETFs. Understanding these rules is essential for effective tax planning. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.