Five simple things about Gold mutual funds of India

The mutual funds which collects money from you to invest directly in gold or in companies which mine gold. While the declared objective is to invest in gold , the investor in such gold mutual fund has no stake in actual gold bought by the mutual fund company .What it means is that ,if you wish to convert your units to actual gold and not money, you cannot do so. What maximum you can get is either dividend or capital gains on sale of the units of gold mutual fund .

Some of the mutual funds specially for investing gold in India are

1. AIG World Gold Fund (G)
   
2. DSP-BR World Gold – RP (G)
   
3. Gold BeES
   
4. Kotak Gold ETF
   
5. Quantum Gold Fund
   
6. Reliance Gold ETF Scheme: Reliance Gold ETF
   
7. SBI Gold Exchange Traded Fund
   
8. UTI Gold Exchange Traded Fund
   
9. DSP-BR World Gold – IP (G)
   

In nutshell, when you invest in gold mutual fund

1. You invest in gold mutual funds , you get units as per the NAV of the fund on the date of investment.
   
2. You cannot convert units to gold at any point of time.
   
3. When you want to sell the units, redemption should be opted with the mutual funds. The difference between purchase and redemption amount is either capital gains or loss.
   
4. Tax advantage is like any other mutual fund –dividend is tax free, where as the units held for more than a year is long term , taxable at special rate of 10% u/s 112 . In case of short term capital gains, however, the general rate (full rate of tax) is levied.
   
5. No wealth tax on amount of investments as the investment is in form of units which is not an asset for Wealth Tax purpose.