SILVERBEES tax: Is your Silver ETF gain STCG or LTCG? Check tax rules

A tax classification mismatch has left some Silver ETF investors wondering which figure they should actually rely on.

In one such case, an investor who bought Nippon Silver ETF (SILVERBEES) in October 2023 and sold it in February 2026 found that the Annual Information Statement (AIS) reported the gains as short-term capital gains (STCG). However, both Axis Direct and ICICI Direct showed the same transaction as long-term capital gains (LTCG).

The answer turns on how Silver ETFs are classified under the capital-gains rules and, crucially, the holding period applicable to them.

Today's Q&A explains such details in response to a query by a reader.

As per the updated Section 50AA the second category is further bifurcated into two categories. The schemes which have more than 65% investments in debt products and those which neither have equity nor debt exposure exceeding more than 65%.

The profits on mutual fund schemes which have debt component more than 65% are taxed as short term capital gains irrespective of the holding period ecept for those which were acquired before 31 st March 2023.

The Profits on sale of equity oriented schemes and all ETF are treated as long term capital gains if the same are held for more than twelve months. However, for the category which does not have equity over 65%, the profits on units of such schemes would become long term if held for more than 36 months prior to amendment of the law. After the amendment the holding period has come down to 24 months. For ETFs there is no change in the holding period requirement even after the amendment the profits shall continue to be taxed as long term capital gains if held for more than 12 months.

Gold and silver fund taxation: A guide to using tax-loss harvesting