NRI Tax on Gold ETF Gains in India: Updated Rules, Dates & Practical Guidance

However, taxation is where confusion begins, especially after multiple rule changes. This guide breaks down how India taxes Gold ETF gains for NRIs, explains recent legislative changes, and highlights what changed after April 1, 2025.

How Gold ETFs Are Classified for Tax Purposes

A Gold ETF listed on Indian exchanges (NSE/BSE) is treated as a capital asset under the Income-tax Act. Any profit from selling units results in capital gains.

Capital gains are categorised as:

• Short-Term Capital Gains (STCG)
• Long-Term Capital Gains (LTCG)

The bucket depends primarily on the holding period, subject to certain deeming provisions discussed later.

Three Key Dates Driving the Tax Outcome for Gold ETF

How mutual funds, including Gold ETFs, are taxed. These three dates decide which rule applies:

1. April 1, 2023

From April 1, 2025, section 50AA was introduced. It applies “special treatment” to certain mutual funds purchased including Gold ETF on or after this date. Even long-held units can be forced into STCG under this rule, depending on fund classification.

What is Special Treatment?
Specified Mutual Fund” refers to a category of mutual fund whose gains on transfer or redemption are always treated as short-term capital gains (STCG) irrespective of how long the units were held, if the units were acquired on or after 1 April 2023.

2. July 23, 2024

India revamped LTCG taxation for several assets taxed under Section 112. A uniform rule now applies:

• 12.5% LTCG rate
• No indexation benefit on Gold ETF
• Effective for transfers on or after July 23, 2024

3. April 1, 2025

The definition of “Specified Mutual Fund” (relevant for Section 50AA) becomes narrower. From this date onward, it mainly captures:

• Funds with over 65% invested in debt + money market instruments
• Certain feeder fund structures

This change removes most non-debt funds (including standard Gold ETFs) from Section 50AA coverage.

Tax Treatment for NRIs Selling Gold ETFs on or After April 1, 2025

This is the scenario most NRIs must focus on.

A) Holding Period Rules

For listed Gold ETF units, the tax classification depends on how long the investment is held. If the unit is held for more than 12 months, the resulting gains are treated as long-term capital gains (LTCG). If the holding period is 12 months or less, the gains are classified as short-term capital gains (STCG).

B) Short-Term Capital Gains (STCG)

If the holding period is 12 months or less, the gains are classified as short-term capital gains (STCG) and are taxed at the normal income tax slab rates applicable to NRIs. These gains do not qualify for the special concessional equity STCG rate under Section 111A, and the final tax payable is further increased by applicable surcharge and health and education cess as per NRI tax rules.

C) Long-Term Capital Gains (LTCG)

If the holding period exceeds 12 months and the sale takes place on or after July 23, 2024, the gains are treated as long-term capital gains and taxed under Section 112 at a flat rate of 12.5%, without any indexation benefit. In addition to this base tax, the applicable surcharge and health and education cess must also be added to arrive at the final tax liability.

Common Misconception: ₹1.25 Lakh Exemption

The annual ₹1.25 lakh LTCG exemption applies only under Section 112A to:

• Listed equity shares
• Equity-oriented mutual funds
• Units of business trusts

Gold ETFs are not covered, so:

Example: If LTCG = ₹2,00,000 on a Gold ETF, the entire ₹2,00,000 is taxable.

No ₹1.25L deduction applies.

How TDS Works for NRIs: Practical Situations

Tax owed and tax deducted are not the same thing.

1. When Selling on NSE/BSE

When an NRI sells Gold ETF units on the NSE or BSE, the trade is settled through the broker and typically no TDS is deducted on such exchange-based transactions. However, the absence of TDS does not eliminate the tax liability. The NRI is still required to report the resulting capital gains in the income tax return and pay any tax that becomes due.

2. Redemption Directly with AMC

When an NRI receives the sale proceeds directly from the AMC, the transaction is governed by Section 195, which means TDS may be deducted at source. The applicable TDS rate depends on whether the gains are classified as short-term or long-term. After the deduction, the NRI should verify the TDS entries in Form 26AS and can claim the corresponding credit while filing the income tax return.

DTAA & NRIs: Can Treaty Relief Remove Indian Tax?

A Double Taxation Avoidance Agreement (DTAA) is a treaty. The treaty text controls the result. Many Indian treaties give India taxing rights on capital gains from Indian securities. Some treaties allocate rights to the country of residence for certain assets. The outcome varies by Article 13 language. 

You must follow three rules if you seek DTAA benefit. 

1. You must hold a Tax Residency Certificate (TRC) from your country. 
2. You must submit Form 10F where needed. 
3. You must compute tax under both treaty and domestic law and use the lower tax outcome, as the Act permits. 

Even under DTAA, India-side TDS can happen. In that case, you must file a return and claim a refund. This is a cash-flow issue, not a final tax issue.

Checklist for NRIs before selling Gold ETFs 

• Confirm your holding period in days and months. 
• Confirm if Section 50AA enters based on purchase date and scheme type. 
• Keep documents: contract note, demat statement, and capital gains report. 
• Check DTAA papers if you plan a treaty claim: TRC and Form 10F. 
• Plan for return filing if tax credit or refund is part of the path.