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Let's understand the capital gains on gold and silver ETFs and mutual funds. For reporting such capital gains, you have to file either ITR 2 or ITR 3 in case you have a business or professional income. To determine whether the ETFs or mutual funds are long term or short term, you are required to determine the holding period.

For gold and silver ETFs, the holding period is 12 months. So if you've held the units for more than 12 months, it becomes a long term capital gain. and if you've held the units for less than 12 months, it becomes short-term capital gains. Now, notice the difference for gold and silver mutual funds. The holding period is 24 months

and not 12 months. Now, this classification is essential. The short-term and long-term capital gains arising from gold and silver ETFs as well as mutual funds are reported in sections 111 or 1112. Since these instruments are non-equity oriented, they are not covered under sections 111a and 1112. Now these sections determine the taxability. The short-term gains under 111 will

be taxed at normal slab rates while the long-term capital gains under section 112 are taxed at a flat rate of 12.5%. No indexation is available and the 1.25 lakh exemption is also not available. This is the most common query we get. Now how do you report these capital gains in the ITR? Under Schedule CG, short-term capital gains under section 111 are reported in Table 5,

whereas long-term capital gains under section 112 are reported in Table 8. Remember to save this reel. Like, share and subscribe.