Silver taxation rules in India: How your earnings from physical silver, silver ETFs and mutual funds are taxed

Silver has been making waves for its extraordinary returns in the last 1 year. The silver spot price on MCX stood at 1,58,644 on October 21, 2025, which was Rs 97,038 exactly a year ago, a 64% rise. As many as 10 silver ETFs, which follow the price of pure silver, have given over 68% return in a year, as per Value Research data as on October 20, 2025. Many investors have cashed in on the rising prices of silver. But when you earn from the sale of physical silver or its electronic form, you need to pay income tax. The tax can vary depending on your silver investment type and the holding period. How your earnings will be taxed, know in this write-up.

Also Read: Silver prices fall: If white metal’s rates dip further, should investors see it as buying opportunity?

Before that, let’s have a look at the popular forms of silver investments.

Physical silver

Physical silver is a tangible form of the white metal that includes, jewellery, bars and coins. This is the most popular form of silver investment and can be bought from jewellers, banks and exchanges..

Silver ETFs

Silver ETFs follow the price of 99.9 pure silver and invest in physical silver and silver-related instruments. As silver prices rise, the rate of an ETF’s net asset value (NAV) also rises, resulting in investors’ benefit. When the silver price falls, the ETF NAV price also decreases. Like its physical form, silver ETFs are considered a good investment option for the long term.

For small-ticket investors, silver ETFs are one of the simplest and most cost-effective ways to invest in silver as many fund houses offer systematic investment plan (SIP) in silver ETFs, which can be started with Rs 500.

Digital silver

This provides investment in silver without holding it in its physical form. Each unit of digital silver is backed by the same amount of real silver. It represents the physical gold stored securely in vaults. Investors can buy or sell digital gold through digital platforms offered by banks, fintech firms and other investment providers. This is also a small-ticket investment, as investors can buy digital silver with as low an amount as Rs 100.

How will your earnings from silver be taxed?

Anita Basrur, Partner, Sudit K. Parekh & Co. LLP, explains various ways of how earnings from different forms of silver are taxed.

Anita says the tax rules for silver are not always straightforward and can depend on whether you hold physical silver (in the form of jewellery, bars, or coins) or silver ETF and the period of holding. Hence, understanding the tax implications is crucial for making informed investment decisions and ensuring proper compliance.

How are earnings from physical silver taxed?

If physical silver is sold within 24 months, the capital gain on such a sale will be treated as short term (STCG) and would get taxed at the slab rate.

In case these are held for more than 24 months, the gain on such sale would be treated as Long-Term Capital Gains (LTCG). Further, if it is purchased on or after 23rd of July 2024, the same will be taxed @ 12.5% without the indexation benefit and if purchased prior, taxation would be @20% with indexation.

STCG, LTCG tax on earnings from silver mutual funds and ETFs

Silver ETFs & mutual funds (if invested in equity) sold within 12 months are considered as STCG and taxed at slab rates, and otherwise LTCG and taxed @12.5% without indexation.

TDS on large transactions from selling silver

Typically, TDS does not get attracted on the sale of silver in any form. However, TDS provisions can be triggered in case of payments to non-residents under Section 195, depending on the tax treaty and the nature of income earned by such person. Also, in some cases, TDS provisions could get attracted u/s 194Q if the value exceeds Rs 50 lakh and the turnover of the buyer exceeds Rs 10 crores.

GST on silver jewellery, bar and coins

A 3% GST is applied on the value of metal, i.e., in the form of a bar or coin or jewellery; and a 5% GST is applied on making charges of jewellery.