Understanding India’s Silver ETF Tax Rules

Exchange-traded funds (ETFs) offer a convenient way to invest in assets like silver. They’re known for their ease of trading, similar to stocks, and remove the hassles of physical storage. But what about taxes? This guide breaks down the tax implications of investing in silver ETFs in India.

How Silver ETFs are Taxed

Silver ETFs are treated like physical silver for tax purposes. This means your profits are subject to capital gains tax, which depends on how long you hold the ETF.

Short-Term Capital Gains Tax

If you hold the silver ETF for less than three years, any profit you make is considered a short-term capital gain. This gain is added to your income and taxed according to your income tax slab.

Long-Term Capital Gains Tax

If you hold the silver ETF for three years or more, the profit is a long-term capital gain. This is taxed at a flat rate of 20% with indexation benefits. Indexation allows you to adjust the purchase price of the ETF for inflation, effectively reducing your tax burden.