Gold coin vs gold bar vs gold ETF vs gold mutual fund: What to buy this Dhanteras? Key features and tax rules compared

Today, November 6, marks the auspicious occasion of Dhanteras, when buyers traditionally purchase gold and silver. While physical gold remains a popular choice, buyers can also explore gold exchange-traded funds (ETFs) and gold mutual funds to gain exposure to the yellow metal.

However, each option comes with different investment requirements, purity levels, additional costs, liquidity features, and tax implications. Here is a comparison of gold coins, bars, ETFs, and mutual funds to help you understand their features before making the Dhanteras purchase.

Gold coins are available in denominations ranging from 0.5 gram to 20 grams or more. A 1-gram coin may cost approximately ₹14,000– ₹30,000, depending on purity, brand, and design.

Coins are generally available in 22-karat or 24-karat purity. Check the purity, BIS hallmark, and HUID before purchasing. Festive designs featuring Lakshmi-Ganesha are also popular.

You can buy coins from jewellery stores and authorised online sellers, including quick-commerce platforms. Coins may carry packaging over the metal value, and resale deductions may apply.

Gold bars are available in denominations such as 5 grams, 10 grams, 20 grams, and 50 grams. The prices are dependent on the prevailing gold value and the seller's premium.

Bars have simpler designs and have nil or lower making charges. They are generally made of 24-karat gold with 999 or 999.9 fineness, making them suitable for investment-oriented physical purchases. Buy from authorised refiners or sellers and check the purity certificate, weight, and buyback conditions.

Gold ETFs are backed by physical gold of at least 99.5% purity, and allow investors to participate in gold-price movements without storing the metal.

You need a demat and trading account to purchase ETF units on the stock exchange. The minimum investment is based on the price of one unit. You can buy or sell units during market hours.

There are no jewellery-making charges or physical storage concerns. However, investors pay the fund's expense ratio and may incur brokerage and other transaction costs.

Gold mutual funds or fund-of-funds (FoFs) invest in units of underlying gold ETFs. Investors can purchase them through regular mutual fund platforms without opening a demat account.

Minimum investments vary by scheme, with some accepting SIPs from ₹100– ₹500. Their NAV is calculated once a day, unlike ETFs that trade throughout market hours. However, their expense ratios can be higher than those of gold ETFs.

But several fund houses have temporarily restricted fresh investments in gold FoFs from October 15–16, 2026. Restrictions cover fresh lump-sum investments and new SIP registrations. Existing SIPs and redemptions may continue as usual.

• Gold coins and bars: Physical gold attracts 3% GST at the time of purchase. On selling, gains are classified as short-term if held for 24 months or less and taxed at the applicable income-tax slab rate. Gains on holdings exceeding 24 months are taxed at 12.5% without indexation.
• Gold ETFs: Gains on units held for 12 months or less are treated as short-term and taxed at the investor's applicable slab rate. Units held for more than 12 months qualify for long-term capital gains tax at 12.5%.
• Gold mutual funds (FoFs): Gains on units held for 24 months or less are taxed at the applicable income-tax slab rate. For units held for more than 24 months, long-term capital gains are taxed at 12.5%.

Coins are convenient for gifting and traditional purchases, while bars suit those seeking larger quantities of physical gold.

ETFs offer exchange-traded exposure and liquidity, whereas FoFs provide a mutual fund route without requiring a demat account. However, fresh investments in gold FoF schemes are currently restricted.

Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.

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