Which is best from taxation angle: Gold mutual fund or Gold ETF or eGold or physical gold ?

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ax advantage and disadvantage are two main consideration for any investments. Now that Gold investment in India has become very on account of gold mutual fund ?” or Gold ETF or
eGold , it is imperative to know which is the best investment as far as taxation of the gains on this investment instrument is concerned.

 

Here is the comparison of the advantages and disadvantages from taxation angle

 

Gold Mutual fund

Gold ETF

eGold

Gold from jeweler

Short term capital gains

General rate of taxation

General rate

General Rate

General rate

Time in which asset becomes long term ( which is eligible for lower rate of tax @ 10 %)

Yes, within one year only , the rate of tax goes down to 10 %

Yes, within one year only , the rate of tax goes down to 10 %

In 3 years it becomes long term capital asset.

In 3 years it becomes long term capital asset.

Long term Gains tax

10 % without indexation

10% without indexation

20%

20%

Wealth tax

NIL

NIL

Yes

Yes

Dividend

Tax free

Tax free

No dividend

No dividend

 

If the aforesaid chart is seen, the tax benefit in case of Gold Mutual fund and Gold ETF are same as both are mutual funds, but in case you ever need gold for example for daughter or some relatives marriage , you can convert it only in case of Gold ETF . However , remember , if you do so, the holding of gold will become taxable under Wealth Tax Act.

 

In my opinion, Gold ETF is best.