NRIs selling Gold ETFs in India are subject to capital gains tax and TDS.
Tax depends on holding period—short-term gains are taxed at slab rates, while long-term gains are taxed at 20% with indexation.
AI ANSWER BOX
What tax applies when NRIs sell Gold ETFs in India?
NRIs pay capital gains tax on Gold ETF sales in India. Short-term gains are taxed as per income slab, while long-term gains attract 20% tax with indexation. TDS is applicable at source.
INTRODUCTION
Gold ETFs have become a popular investment choice for Non-Resident Indians (NRIs) looking for gold exposure without physical storage hassles. However, when NRIs decide to sell Gold ETFs in India, taxation rules often create confusion.
Unlike resident investors, NRIs face:
Mandatory TDS
Repatriation conditions
Different compliance requirements
This guide explains:
How Gold ETFs are taxed for NRIs
Short-term vs long-term capital gains
TDS rules
Repatriation implications
Common mistakes NRIs should avoid
Written with practical tax experience and regulatory clarity, this blog helps NRIs plan exits smartly.
WHAT ARE GOLD ETFs?
Gold ETFs (Exchange Traded Funds) are:
Mutual fund units backed by physical gold
Traded on stock exchanges like shares
Linked to domestic gold prices
For tax purposes, Gold ETFs are treated as non-equity mutual funds in India.
CAN NRIs INVEST & SELL GOLD ETFs IN INDIA?
Yes. NRIs can:
Buy Gold ETFs through NRE or NRO demat accounts
Sell them on Indian stock exchanges
📌 However, tax and repatriation depend on account type (NRE vs NRO).
TAXATION RULES FOR NRIs SELLING GOLD ETFs
HOLDING PERIOD MATTERS MOST
| Holding Period | Tax Type |
|---|---|
| Up to 36 months | Short-Term Capital Gain (STCG) |
| More than 36 months | Long-Term Capital Gain (LTCG) |
🔹 SHORT-TERM CAPITAL GAINS (STCG)
Added to total income in India
Taxed as per applicable income tax slab
TDS applicable at slab rate
📌 This often surprises NRIs with higher slab deductions.
🔹 LONG-TERM CAPITAL GAINS (LTCG)
Taxed at 20% with indexation benefit
Indexation reduces taxable gains significantly
TDS deducted at 20% + surcharge + cess
📌 LTCG is generally more tax-efficient for NRIs.
TDS ON GOLD ETF SALE (VERY IMPORTANT)
| Gain Type | TDS Rate |
|---|---|
| STCG | As per income slab |
| LTCG | 20% + cess |
📌 Even if actual tax liability is lower, TDS is mandatory. Refund can be claimed via ITR.
TAX CALCULATION EXAMPLE (NRI)
| Particulars | Amount |
|---|---|
| Purchase Value | ₹5,00,000 |
| Sale Value | ₹8,00,000 |
| Holding Period | 4 years |
| Indexed Cost | ₹6,30,000 |
| LTCG | ₹1,70,000 |
| Tax @20% | ₹34,000 (+ cess) |
REPATRIATION RULES FOR NRIs
Investments via NRE account → Fully repatriable
Investments via NRO account → Repatriation capped at USD 1 million/year
📌 Proper documentation is required for repatriation.
EXPERT COMMENTARY
“NRIs often overlook TDS impact on Gold ETF sales. Proper tax planning and holding strategy can significantly reduce post-tax returns.”
— International Tax Consultant, India
COMMON MISTAKES NRIs MAKE
Ignoring holding period
Assuming Gold ETF tax is same as physical gold
Not factoring TDS cash flow impact
Missing ITR filing for refunds
Not checking DTAA benefits
SMART TAX PLANNING TIPS FOR NRIs
Prefer long-term holding for indexation benefit
Plan sale year with low India income
File Indian ITR to claim excess TDS refund
Maintain proper purchase records
Consult tax advisor for DTAA applicability
❓ FREQUENTLY ASKED QUESTIONS (FAQs)
1. Are Gold ETFs taxable for NRIs in India?
Yes, capital gains tax applies.
2. What is long-term holding period for Gold ETFs?
More than 36 months.
3. Is TDS mandatory for NRIs?
Yes, on every sale.
4. Can NRIs claim indexation?
Yes, for long-term gains.
5. Is Gold ETF tax same as physical gold?
Yes, for holding period and rates.
6. Can NRIs get TDS refund?
Yes, by filing ITR.
7. Which account is better for Gold ETF—NRE or NRO?
NRE for repatriation ease.
8. Is DTAA applicable?
Yes, in some cases.
9. Do NRIs need PAN to sell Gold ETF?
Yes.
10. Is surcharge applicable?
Yes, depending on income.
11. Can Gold ETF losses be set off?
Yes, as per capital gains rules.
12. Is GST applicable?
No, on ETF sale.
13. Does exchange matter?
No, tax rules remain same.
14. Is tax deducted even if loss occurs?
TDS may still apply.
KEY TAKEAWAYS
Gold ETFs are taxed as non-equity funds
Holding period of 36 months is crucial
TDS applies for NRIs regardless of gains
Indexation benefits reduce LTCG tax
Proper planning avoids cash flow shock
CONCLUSION + CTA
Selling Gold ETFs as an NRI requires clear understanding of Indian tax rules. With the right holding strategy and timely compliance, NRIs can optimize returns and avoid unnecessary tax stress.
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Published on : 12th January
Published by : SMITA
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