How are exchange-traded funds (ETFs) taxed?

Slowly but surely, exchange-traded funds (ETFs) are coming to the mainstream. Due to their low costs ( expense ratio ), transparency and easy access to a variety of asset classes, investors are looking at ETFs as a valid investment option. In the last financial year, between April 2024 and March 2025, ETFs received over Rs 80,000 crore of net inflows, compared to Rs 48,000 crore in the previous one. Given the increasing interest, let's look at how ETFs are taxed in India. The good news is, unlike earlier, ETF taxation is now more streamlined. Since July 2024, all ETFs — whether they invest in equities, bonds, commodities or global markets — are treated as long-term investments if held for more than one year. That's one rule for all, making it easier to track. However, what hasn't changed is this: the actual tax you pay still depends on what the ETF invests in. For instance, ETFs that invest in equity enjoy concessional tax treatment, while others like debt or international ETFs follow different taxation rules. ETF taxation ETF type What it holds

This article was originally published on April 23, 2025.