Gold has delivered a higher return than the over the past 20 years. But for investors, the amount they ultimately take home depends not just on how much the investment has grown, but also on the applicable when it is sold.
Here’s what you need to know about post-tax returns.
What would ₹1 lakh invested in each become?
Suppose an had invested a lump sum of ₹1 lakh in both asset classes 20 years ago and held both investments until today.
| Investment horizon | Nifty 50 TRI CAGR | ₹1 lakh in Nifty 50 | Gold CAGR | ₹1 lakh in gold |
| 20 years | 11.6% | ₹8,98,016 | 14.5% | ₹15,00,064 |
*Source: FundsIndia’s Wealth Conversations Report, Data as on 31 August 2026, Gold returns are adjusted for USD-INR Exchange Rate
Based on the 20-year annualised returns, the investment would have grown to:
- Nifty 50: ₹8.98 lakh
- Gold: ₹15 lakh
How does capital gains tax change the picture?
The tax treatment is different for the two investments.
The Nifty 50 ETF is treated as an equity-oriented product for capital gains taxation. If held for more than one year, the gain is generally treated as long-term capital gain (LTCG).
Equity LTCG of up to ₹1.25 lakh in a financial year is exempt. Gains above this threshold are taxed at 12.5%, subject to the applicable rules.
For a gold ETF, the equity LTCG exemption does not apply. Long-term gains after one year of holding are taxed at 12.5%.
Here, gold and Nifty 50 TRI returns are used as proxies for the respective ETFs, assuming the ETFs were available for investment 20 years ago.
| Particulars | Nifty 50 ETF | Gold ETF |
| Initial investment | ₹1,00,000 | ₹1,00,000 |
| Value before tax | ₹8,98,016 | ₹15,00,064 |
| Pre-tax gain | ₹7,98,016 | ₹14,00,064 |
| LTCG exemption | ₹1,25,000 | Nil |
| Taxable LTCG | ₹6,73,016 | ₹14,00,064 |
| LTCG tax @ 12.5% | ₹84,127 | ₹1,75,008 |
| Post-tax gain | ₹7,13,889 | ₹12,25,056 |
| Final value after tax | ₹8,13,889 | ₹13,25,056 |
*Investment Period: 20 years; Excludes surcharge and cess; Actual calculation may vary; Gold and Nifty 50 TRI returns are used as proxies for the respective ETFs, assuming the ETFs were available for investment 20 years ago.
For the Nifty 50 ETF, the ₹1 lakh investment grows to about ₹8.98 lakh over 20 years, resulting in a capital gain of roughly ₹7.98 lakh.
After applying the ₹1.25 lakh equity LTCG exemption, the taxable gain comes to about ₹6.73 lakh. At 12.5%, the estimated tax is around ₹84,000, leaving the investor with ₹8.14 lakh after tax.
In a gold ETF, the entire long-term gain is considered for tax at 12.5%. The resulting tax is about ₹1.75 lakh, leaving the investor with around ₹13.25 lakh after tax.
What are the post-tax returns?
Once the tax outgo is factored in, the annualised returns are lower than the headline pre-tax CAGR:
- Nifty 50: Pre-tax CAGR of 11.6% falls to a post-tax CAGR of 11.05%.
- Gold: Pre-tax CAGR of 14.5% falls to a post-tax CAGR of 13.79%.
The comparison is based on Nifty 50 TRI and gold returns, not the actual returns of any particular ETF. An investor’s actual ETF returns can differ because of factors such as expense ratios and tracking error.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.