The tax rates and holding period for various assets were revised in Budget 2024, and this includes silver investments as well.
Silver is no longer just the metal in spoons, jewellery, or industrial use – it’s also becoming a valuable financial asset in portfolios. With its more affordable price compared to gold, silver has become an accessible option for a wide range of investors.
As more people increasingly turn to silver ETFs, mutual funds, and digital silver, it’s important to understand how different forms of silver are taxed.
Let’s dive into the details:
1. Physical silver
Silver has always been a reliable option for those looking to invest in something tangible. Whether it’s in the form of coins, bars, or jewellery, silver offers both value and versatility. While it may not have the same shine as gold, silver is stable, accessible, and a great way to diversify your financial portfolio.
Tax implications: When you sell physical silver after holding it for more than 24 months, it’s considered a Long-Term Capital Gain (LTCG). If you sell it after holding it for less than 24 months, it’s a Short-Term Capital Gain (STCG).
For STCG, you’ll need to pay tax according to the applicable slab rates, while for LTCG, the tax rate is 12.5% without the benefit of indexation.
2. Digital silver
Digital silver lets you invest in silver without the need to physically own or store it. You can purchase silver online, starting from as little as one rupee, and it’s securely stored in a protected vault. You have the flexibility to buy, sell, or trade your silver at any time, based on current market prices.
Tax implications: Same as physical silver.
3. Silver ETFs
Silver ETFs track the price of silver and are traded on the stock exchange. You can invest in them and hold them in your DEMAT account, making it easy to buy and sell silver without physically owning it.
Tax implications: Since Silver ETFs are listed securities, their tax treatment differs slightly from physical silver.
If you sell them within 12 months, the gains are treated as STCG and taxed as per your income tax slab. However, if you hold them for more than 12 months, the gains qualify as LTCG and are taxed at a flat 12.5% without indexation.
4. Silver mutual funds
Silver mutual funds invest in silver ETFs or other silver-related assets. They offer exposure to silver without directly purchasing silver ETFs. By pooling money from multiple investors, these funds provide a more diversified way to invest in silver.
Tax implications: Same as Silver ETFs.
To read about taxes on gold investments, check out our detailed thread!