Dhanteras 2026: Gold Coins, Bars, ETFs or Mutual Funds? Check Costs and Tax Rules Before Buying

Gold coins, bars, exchange-traded funds (ETFs) and gold mutual funds are among the ways to buy gold this Dhanteras 2026. The gold price may be the starting point for all four, but what buyers pay and what they receive when they sell can be different.

A person buying a gold coin or bar pays 3% Goods and Services Tax (GST). The seller may also charge a premium over the gold rate. These charges are part of the purchase price and are not recovered separately when the gold is sold.

Gold ETFs and gold mutual funds do not have the same GST charge on the investment amount. Instead, there are fund expenses. ETF investors may also pay brokerage and other trading charges.

There is a difference in capital gains tax as well. Physical gold held for more than two years generally attracts 12.5% tax on long-term gains. For listed gold ETFs, the holding period is more than one year. Gold mutual funds generally require more than two years to qualify for long-term capital gains treatment.

The four products also differ in how they are purchased. Coins and bars are bought from sellers and kept physically. Gold ETFs trade on stock exchanges, while gold mutual funds are bought and redeemed through fund houses or investment platforms.

Gold Coins and Bars: How Much Do GST and Other Charges Add?

Gold coins and bars are priced according to their weight and purity. The final bill can also include a premium charged by the seller, apart from GST.

The premium is not fixed. It can change depending on the size of the coin or bar, the brand and where it is purchased.

Take a purchase of ₹1 lakh as an example. If a gold coin carries a 3% premium and 3% GST, the actual value of gold in that purchase would be around ₹94,260.

For a gold bar with a 1% premium and 3% GST, the value of gold would be approximately ₹96,126.

The calculation assumes these premiums only to show the effect of charges. Actual rates may be higher or lower.

There can be costs at the time of sale too. Dealers may offer a buyback price below the prevailing selling rate, depending on their policies and the product being sold.

Gold ETFs and Gold Mutual Funds: What Charges Apply?

Gold ETFs are bought and sold on stock exchanges, much like shares. Investors need a demat and trading account to purchase them.

There is no 3% GST on the amount invested in a gold ETF. However, brokerage and transaction charges may apply. The fund also has an annual expense ratio, which is reflected in its net asset value.

ETF prices can differ from their underlying value during trading hours. The difference depends partly on demand, supply and liquidity in the market.

Gold mutual funds work differently. Most invest in gold ETFs and allow investors to purchase units without a demat account.

They can be bought through a lump-sum investment or a systematic investment plan (SIP). The units are allotted at the applicable net asset value rather than an exchange-traded price.

Gold mutual funds have their own expenses, in addition to the costs associated with the underlying ETF. Some schemes may also charge an exit load if units are redeemed within a specified period.

Gold ETF vs Physical Gold: How Are Profits Taxed?

The period for which gold is held determines whether the profit is treated as a short-term or long-term capital gain.

For gold coins and bars, gains on holdings of more than 24 months are generally taxed at 12.5% without indexation. If the gold is sold within 24 months, the profit is taxed according to the investor's income-tax slab.

Listed gold ETFs qualify for long-term capital gains treatment after more than 12 months. Such gains are generally taxed at 12.5% without indexation. Gains from units sold within 12 months are taxed at slab rates.

Gold mutual funds generally have a longer holding period for this purpose. Units held for more than 24 months qualify for long-term capital gains tax at 12.5%, while gains from shorter holdings are taxed at the applicable slab rate.

For example, gold ETF units sold after 18 months would generally qualify for long-term capital gains treatment. Gold coins, bars and gold mutual fund units sold after the same period would generally be treated as short-term holdings.

Applicable cess and surcharge are additional.

What Changes When Gold Is Sold?

Selling physical gold involves finding a buyer or returning to a dealer. The amount offered can depend on the purity, weight and the dealer's buyback terms. Storage and insurance, where used, can add to the cost of holding it.

Gold ETF units can be sold through the stock exchange during market hours. The amount received depends on the trading price at which the order is executed, after applicable charges.

Gold mutual fund units are redeemed through the fund house or an investment platform. The redemption value is calculated using the applicable net asset value, subject to any exit load.

Gold prices remain the main factor affecting the value of all four products. However, GST, premiums, fund expenses, selling charges and taxes mean the final amount received may differ even when the underlying gold price moves by the same percentage.

Also Read - IFL Finance IPO Gets SEBI Nod: Plans Fresh Issue Of 3.55 Crore Shares And Promoter OFS Of 30 Lakh Shares