Google CEO Sundar Pichai Celebrates Quantum Algorithm Breakthrough; Elon Musk Reacts: “Looks Like Quantum Computing Is Becoming Relevant”

Introduction

When Sundar Pichai, CEO of Google, announced a major quantum-computing milestone, the tech world took notice. On October 22–23, 2025, Google revealed that its new quantum processor and algorithm achieved what they call a verifiable quantum advantage—a computation genuinely beyond what classical supercomputers can do. 

In response, Elon Musk of Tesla and SpaceX chimed in: “Congrats. Looks like quantum computing is becoming relevant.”

In this article we’ll unpack what this breakthrough is, why it matters, how the tech works, what the implications could be, and what it means for the future of computing, business and society.

 

What exactly was announced?

The technology and claim

Google’s blog post details that their new algorithm, dubbed “Quantum Echoes”, running on their quantum processor called the Willow chip, has achieved the first-ever verifiable quantum advantage—that is, a quantum processor performing a task that classical computers cannot match, and the result can be independently checked. 

Key figures:

• The algorithm reportedly ran 13,000 × faster than the best classical algorithm on a top supercomputer. 

• It dealt with computing the structure and interactions of molecules (via nuclear magnetic resonance techniques) — thereby modelling quantum mechanical phenomena that classical computers struggle with. 

• The quantum hardware: Willow has a 105-qubit array with high fidelities (single-qubit gates ~99.97%, entangling gates ~99.88%, readout ~99.5%) and could run millions of quantum echo measurements in tens of seconds. 

What Sundar Pichai said

In his social media post, Pichai wrote:

“Our Willow chip has achieved the first-ever verifiable quantum advantage. This new algorithm can explain interactions between atoms in a molecule using nuclear magnetic resonance, paving a path toward future uses in drug discovery and materials science.”

He emphasized that this is a major step from theoretical demonstrations toward useful quantum computing. 

Elon Musk’s reaction

Elon Musk replied simply:

“Congrats. Looks like quantum computing is becoming relevant.” 

While short, the comment is noteworthy because Musk, typically focused on rockets, EVs, energy, and AI, hasn’t regularly weighed in on quantum computing—so even a brief acknowledgment suggests the field is crossing the threshold into broader recognition. 

 

Why this matters: The significance of verifiable quantum advantage

Quantum advantage vs quantum supremacy

In quantum computing discourse, two terms are often used: “quantum supremacy” (or quantum advantage) meaning a quantum computer can perform a task that classical ones cannot feasibly perform. 

But many earlier claims were narrow (toy problems), not verifiable in the sense of reproducible by others. Google’s claim differs: they emphasise verifiable quantum advantage—so others can check the result, reproduce it or use it as a benchmark. 

Why 13,000× matters

A speed-up factor of ~13,000 is enormous in computing research. It means that for that chosen problem (molecular structure modelling) the quantum system outpaces classical supercomputers by many orders of magnitude. That suggests quantum computing is not just a lab curiosity—but inching toward real-world relevance.

What ‘verifiable’ means for the field

Verifiability means:

• The outcome can be confirmed by independent quantum systems or classical verification methods. blog.google

• It builds trust in quantum computing results (critical for wider adoption).

• It closes the gap between “we showed something weird in a lab” and “this can form a foundation for impactful applications”.

Implications for industries

• Medicine & drug discovery: Quantum computers simulate molecular interactions at scales classical computers struggle with. Google notes their algorithm can measure molecular geometry in ways conventional NMR cannot. 

• Materials science: Better simulation can lead to new materials (for batteries, solar cells, catalysts) faster.

• AI & data: Quantum may help generate new kinds of data or features that classical systems cannot, accelerating AI models. Google mentions this in their blog. 

• Cryptography & security: As quantum computing grows, older cryptographic methods could become vulnerable—raising urgency for quantum-resistant encryption. 

 

The technology deep dive: how did they do it?

The Willow chip and its architecture

The Willow chip is a 105-qubit quantum processor built by Google’s Quantum AI unit. Some technical highlights:

• Superconducting qubits (artificial atoms) — a leading platform in quantum hardware. 

• Exceptional gate fidelities: Single-qubit gates ~99.97%, entangling gates ~99.88%, and readout ~99.5%. These levels of precision are vital because quantum computations are extremely sensitive to errors. 

• Millions of measurements: The Quantum Echoes algorithm involved a trillion measurements, a huge number for quantum computing experiments.

The Quantum Echoes algorithm

This is the algorithm that drove the demonstration of verifiable advantage. Its fundamentals:

• It is based on an Out-of-Time-Ordered Correlator (OTOC) — a type of measurement in quantum many-body physics that reveals how disturbances propagate through a system (e.g., how a perturbation to one qubit spreads across the system).

• Procedure in brief:

1. Prepare quantum state on Willow.
2. Run operations (gates) forward.
3. Perturb one qubit.
4. Reverse the operations (run backwards).
5. Measure how the perturbation spread (echo) through the system.

• Because of high-fidelity gates and low error rates, the chip could execute this complex sequence with precision, enabling a result that classical computers cannot easily replicate.

Why the molecular structure matter

In the experiment, Google used the algorithm to measure the relative positions of atoms in molecules, beyond what conventional nuclear magnetic resonance (NMR) techniques could reveal. 

This is crucial because many real-world problems (drugs binding to proteins, catalysts in material science) depend on detailed quantum mechanical understanding of molecular interactions. Classical computers become exponentially harder to scale for such tasks.

What remains challenging

Despite the success, Google and others are cautious:

• The system still isn’t fault-tolerant (i.e., large-scale error-corrected quantum computers are still many years away).

• The problem solved is highly specific—not yet a broad “killer app” in business or consumer domains.

• Scaling from 105 qubits to hundreds of thousands (or more) qubits, with consistent error rates, remains a major engineering challenge.

 

Context: The quantum computing race

Where Google stands

Google has been one of the early leaders in quantum computing. In 2019, Google announced a quantum processor achieved what they called quantum supremacy (solving a problem in minutes that would take classical supercomputers thousands of years) — though that claim was contested.

What matters now is that this new 2025 announcement strengthens their position with verifiability and practical demonstration. 

The broader ecosystem

Other major companies and labs are also investing heavily:

• IBM, Microsoft, Intel, and a host of startups are all working on hardware, algorithms, error correction, applications.

• The field has matured from theoretical promise to serious engineering and applied research.

Why the public reaction matters

When tech leaders like Sundar Pichai and Elon Musk publicly highlight quantum computing, it sends a signal: this is now part of mainstream technological discourse, not just academic labs. Musk’s reply, though brief, reflects this shift: quantum computing has evolved from niche research to a strategic frontier.

 

Business and strategic implications

For Google / Alphabet

• A breakthrough strengthens Google’s leadership in quantum computing and reinforces its credibility in emerging tech.

• It may improve their positioning in quantum-cloud services, partnerships, materials research, drug discovery collaborations.

• Share markets responded positively to earlier quantum announcements from Google, signaling investor optimism. 

For industry sectors

• Pharmaceuticals: Faster, more accurate molecular modelling could reduce drug discovery time and cost.

• Materials & energy: Development of novel materials (e.g., better batteries, solar materials, catalysts) could accelerate.

• Defense & cybersecurity: Need for quantum-safe encryption will grow as quantum hardware advances.

• Cloud computing & services: Quantum computing may eventually become part of cloud offerings (quantum-as-a-service) for niche but high-value workloads.

For India and emerging economies

Given the user location (Ghaziabad, Uttar Pradesh), India stands to benefit from the global quantum leap in several ways:

• Quantum research collaborations (Indian academic institutions + global labs) could gain momentum.

• Quantum‐enabled materials or pharmaceuticals developed globally might have accelerated access in India.

• Indian companies might explore quantum partnerships or quantum-ready infrastructure, positioning for the future.

• Talent development: As quantum becomes more relevant, India’s STEM landscape might emphasise quantum information science, giving young researchers new opportunities.

 

What’s next: Timelines, expectations & caveats

Realistic timelines

• Google itself says practical quantum computing applications may come within five years. 

• However, many experts caution that broad, fault-tolerant quantum computers are more likely a 10-20 year horizon.

• In the short term (~1-5 years), we may see hybrid quantum-classical workflows and niche applications rather than full mainstream use.

Caveats & risks

• Scaling remains a huge challenge: more qubits + error correction + stability = massive engineering.

• Error rates, decoherence, connectivity, cost, cooling (for superconducting qubits) remain constraints.

• The solved problem, though impressive, is specialized — other problems may not yield such dramatic speed-ups (yet).

• Quantum and classical computing aren’t direct substitutes — for many tasks classical will remain efficient and cost-effective.

• Ethical, security and governance issues: Quantum computing could disrupt cryptography, privacy, and national security — requiring preparation.

What to watch

• Publication of the full peer-reviewed research (already indicated by Google’s Nature paper mention).

• New partnerships between quantum computing firms and pharmaceutical/materials companies.

• Government policy and investment in quantum computing infrastructure and talent (national quantum initiatives).

• Developments in quantum-resistant cryptography and standardisation.

• Entry of new players and hardware platforms (trapped ions, photonic qubits, topological qubits) that might shift the competitive landscape.

 

Why Elon Musk’s remark is more than a tweet

Elon Musk’s simple comment— “Looks like quantum computing is becoming relevant”—does two things:

It signals that even a tech visionary who typically focuses on other frontiers recognizes the growing significance of quantum.

It underlines that quantum computing is not just academic anymore—it is being treated as a strategic technology by major players.

Though Musk did not delve into detail, his remark adds credibility to the perception that quantum is crossing from “lab future” to “industrial future”.

 

What this means for you and me

As a general reader

• It’s a marker of the dawn of a new computing era. Knowing about quantum computing, its implications and limitations is becoming part of tech literacy.

• Innovations such as faster drug discovery or better materials might affect your life in 5-10 years (e.g., improved medicines, more efficient batteries, cheaper solar).

• Cybersecurity will evolve: the encryption securing your data today may need quantum-safe alternatives in the future.

For professionals & businesses

• Businesses should monitor quantum computing developments. Early-stage issues: How could quantum change your industry? Do you need quantum-ready strategies?

• For R&D teams: Consider partnerships or exploring quantum algorithms for niche problems (e.g., molecular simulation, optimisation).

• For investors and policy-makers: Quantum computing represents a frontier of strategic tech investment and infrastructure development.

For students, researchers and India’s tech ecosystem

• If you’re a STEM student or professional in India, now is a good time to explore quantum information science, quantum hardware, algorithm development.

• Universities and research institutes could ramp up programs in quantum computing — positioning India competitively in the coming decade.

• Given India’s strengths (IT, maths, physics), and government attention on emerging technologies, quantum computing offers a potential growth area.

 

Looking ahead: From promise to practice

Transitioning to applications

The challenge now is turning this breakthrough into useful, robust, cost-effective quantum systems. This means:

• Designing algorithms that solve real-world industrial problems (not just lab demonstrations).

• Building hardware that is scalable, reliable and deployable outside of niche labs.

• Creating software and toolchains that allow non-quantum-experts to use quantum computing.

• Integrating quantum with classical computing and cloud infrastructure.

Broader ecosystem developments

• Cloud providers (e.g., Google Cloud, Amazon AWS, Microsoft Azure) may increasingly offer quantum services, making access easier for businesses.

• Standardisation of quantum error correction, quantum programming languages, and quantum-ready cryptography will become critical.

• International cooperation and regulation: Quantum computing spans national security, trade, research — so governance frameworks will evolve.

Impacts on society

• Health: Better drug design and molecular simulations could speed up treatments for diseases, reduce R&D costs.
• Environment & energy: Materials design for better batteries, solar, catalysts could accelerate clean tech.
• Economy: Countries that lead in quantum hardware or algorithms could gain strategic tech advantage.
• Security: Cryptography must evolve to prevent future quantum attacks on classical encryption systems.

 

Summary & concluding thoughts

The announcement by Sundar Pichai and Google of a verifiable quantum advantage using the Willow chip and Quantum Echoes algorithm marks a significant milestone in computing. 

The 13,000× speed-up claim is eye-catching, but more importantly the demonstration of verifiability and a tangible problem (molecular structure modelling) signals that quantum computing is moving toward real-world relevance.

Elon Musk’s brief but telling response underscores that major tech figures are taking quantum seriously. It’s no longer the niche realm of physicists—it is now part of the mainstream tech horizon.

That said, it’s still early. We are not yet at the point where quantum computers will replace classical ones for everyday tasks. Instead, we are entering a transitional phase: quantum machines will gradually complement classical systems, starting with niche high-value applications.

In the next 5 to 10 years, expect hybrid systems, quantum-cloud services, pilot applications in pharma/materials, and increasing development of quantum-safe infrastructure.

For India and global readers alike, this means opportunities: from talent development, research collaboration, strategic investment, to staying informed and prepared for the quantum era.

In short: the quantum era is beginning to emerge from the lab shadows. The headline might read “Google achieved first verifiable quantum advantage” and “Elon Musk says quantum computing is becoming relevant”, but the deeper story is that computing, tech, industries, and ultimately society may be on the cusp of a profound shift.

Frequently Asked Questions (FAQ)

1. What breakthrough did Sundar Pichai announce?

Sundar Pichai announced that Google’s new Willow chip and Quantum Echoes algorithm achieved the world’s first verifiable quantum advantage — performing computations that even the most powerful classical supercomputers cannot match.

 

2. What does “verifiable quantum advantage” mean?

It means the result of a quantum computation can be independently verified, ensuring transparency and credibility — a major step forward from previous claims of “quantum supremacy.”

 

3. How fast is Google’s new quantum algorithm compared to classical computers?

According to Google, the Quantum Echoes algorithm on the Willow chip runs about 13,000 times faster than the best available classical supercomputers for specific molecular simulations.

 

4. What was Elon Musk’s reaction to this quantum breakthrough?

Elon Musk congratulated Sundar Pichai, commenting, “Looks like quantum computing is becoming relevant,” signaling mainstream recognition of the technology’s potential.

 

5. How could this breakthrough impact industries?

This quantum leap could transform drug discovery, materials science, AI, and cryptography, enabling faster simulations and more efficient innovations in medicine, energy, and cybersecurity.

 

6. How does the Willow chip differ from previous quantum processors?

The Willow chip uses 105 superconducting qubits with exceptionally high gate fidelities (99.97%), making it one of the most precise and powerful quantum processors ever built.

 

7. Is quantum computing ready for commercial use?

Not yet. While this marks a historic milestone, scalable, fault-tolerant quantum computers that can handle everyday commercial workloads are likely 5–15 years away.

 

8. What does this mean for India and global tech ecosystems?

India can benefit by investing in quantum research, talent, and collaborations with global tech giants. Quantum literacy and early adoption can give the country a competitive edge in future technologies.

 

9. Why is Elon Musk’s comment important?

Musk rarely comments on quantum computing. His acknowledgment underscores that even mainstream innovators in AI, EVs, and space see quantum computing as a real and relevant frontier.

 

10. What’s next for Google in quantum computing?

Google plans to focus on scalability, error correction, and real-world applications in medicine, materials, and AI. Their goal is to develop a useful, fault-tolerant quantum computer within this decade.

 Conclusion

Google’s announcement of a verifiable quantum advantage using its Willow chip and Quantum Echoes algorithm marks a revolutionary milestone in computing history. For the first time, quantum performance isn’t just theoretical — it’s independently verifiable and 13,000× faster than classical computation in specific use cases.

Sundar Pichai’s optimism reflects Google’s growing dominance in the quantum field, while Elon Musk’s brief yet impactful remark — “Looks like quantum computing is becoming relevant” — underscores a broader recognition of the technology’s transformative power.

This achievement opens new doors for medicine, materials science, AI, and cybersecurity, and it brings us one step closer to realizing the potential of quantum technology. Though challenges like scalability and error correction remain, the journey toward practical quantum computing is no longer a distant dream — it’s an emerging reality shaping the next era of innovation.

In essence, Google’s Willow chip breakthrough and Elon Musk’s acknowledgment together symbolize the dawn of the quantum age, where science fiction steadily becomes science fact.

Sundar Pichai quantum breakthrough

Silver Taxation Rules in India 2025: How Physical Silver, Silver ETFs & Mutual Funds Are Taxed

Silver Taxation Rules in India: How Your Earnings from Physical Silver, Silver ETFs and Mutual Funds Are Taxed

Investing in silver can be a smart move to diversify your portfolio. But when it comes to taxation, things can get complex — especially because the rules differ depending on how you invest: physical silver, silver exchange-traded funds (ETFs), or mutual funds (including funds of funds) that invest in silver.

In this comprehensive guide, we’ll walk you through the tax implications in India for each of these investment forms — in clear, human-friendly language.

Whether you’re newly considering silver or already invested, understanding these rules will help you plan better, avoid surprises, and file your taxes correctly.

1. Understanding the different forms of silver investments

Before diving into tax rules, it’s crucial to understand the types of silver investments most common in India, because the tax treatment differs between them.

Physical silver

This refers to tangible holdings of silver: bars, coins, or jewellery made of silver. Buying a silver bar or coin, or holding silver jewellery primarily for investment (rather than ornament) falls into this category.

For physical silver:

• You bear storage or safekeeping risk.

• You incur GST on purchase (more on this in a later section).

• On sale, your holding period and acquisition date matter for tax.

Silver ETFs

A silver ETF is a fund listed on a stock exchange whose units you can buy and sell like shares, and which tracks the price of (pure) silver. For example, fund houses in India launched silver-ETFs that invest in physical silver or silver-related instruments, and their Net Asset Value (NAV) rises (or falls) with the silver price. 

Key points:

• You need a Demat + trading account to invest. 

• Since it tracks silver, you get “commodity-exposure” without physically storing silver.

• Tax rules for these are different from purely equity investments.

Silver mutual funds / Fund of Funds (FoFs) investing in silver

Some mutual funds may invest in silver ETFs or silver commodities, effectively making them “silver mutual funds” or “funds of funds (FoFs)” that allocate into silver ETFs. Their taxation depends on how they’re classified (equity vs non-equity) and on the holding period. 

In short:

• If you hold physical silver → tax follows one set of rules.

• If you hold silver ETFs or mutual funds tied to silver → tax follows another.

• Also important: when you purchased and how long you held it matter a lot.

2. Income tax basics you need to know

To make sense of the rules ahead, here are some standard income-tax terms used in India:

• Short-Term Capital Gains (STCG): Gains from transfer of a capital asset held for a relatively short period. The exact “short term” threshold depends on the type of asset.

• Long-Term Capital Gains (LTCG): Gains from transfer of a capital asset held for more than the “short term” threshold.

• Indexation benefit: For certain assets, you can adjust the “cost of acquisition” for inflation (using the Cost Inflation Index, CII) when calculating LTCG, which reduces taxable gain.

• Tax slab rate: For STCG in many cases the gain is added to your taxable income and taxed as per your income tax slab (e.g., 0%, 5%, 10%, 15%, 30% etc, depending on your income).

• Flat tax rate: For some assets, LTCG or STCG may be taxed at a flat rate (say 12.5%) instead of slab rate.

• Holding period: How long you have held the asset before selling. The threshold holds significance for qualifying as STCG vs LTCG.

Keep these in mind as we explore how they apply to silver investments.

3. Taxation of Physical Silver

Let’s first tackle physical silver — bars, coins, jewellery (held primarily for investment) — because this is the form many retail investors are familiar with.

Holding period thresholds

According to recent clarifications (for example the article in The Economic Times), for physical silver:

• If you sell within 24 months (i.e., held for less than or equal to 24 months) → the gain is treated as Short-Term Capital Gain (STCG).

• If you sell after more than 24 months, then it is treated as Long-Term Capital Gain (LTCG). 

Note: Previously, for some precious metals the threshold was 36 months; but the new rules (from the 2024 Budget) have shortened the holding period for certain cases. 

Tax rate on sale of physical silver

Once you determine STCG vs LTCG, what tax rate applies?

• STCG (held ≤24 months) → The gain is added to your total taxable income and taxed at your applicable income tax slab rate (your earning bracket). 

• LTCG (held >24 months) → The tax rate depends on when you purchased the silver:
• If purchased on or after 23 July 2024, LTCG is taxed at 12.5% flat, without indexation benefit.

• If purchased before 23 July 2024, older rules may apply: LTCG taxed at 20% with indexation benefit.

Example

Suppose you bought a silver bar on 1 January 2023 for ₹1,00,000, and you sell it on 1 February 2025 for ₹1,50,000. Holding period: more than 24 months → qualifies for LTCG. If purchase before 23 July 2024, so 20% with indexation applies. After applying indexation you compute the gain, then tax at 20%.

If instead you purchased on 1 August 2024 for ₹1,00,000 and sold on 1 October 2026 for ₹1,50,000, then since purchased after 23 July 2024, LTCG taxed at 12.5% flat, no indexation.

GST and other taxes when buying physical silver

• When you buy silver bars or coins — Goods & Services Tax (GST) applies. For silver (in unwrought form) the GST is 3 %. For silver jewellery, the metal portion may be 3 % and making charges are subject to 5 % GST. 

• If you buy jewellery, you must consider that part of cost is “jewellery making charges”, which also attract GST (making charges are at 5 %). 

Important things to note

• The actual date of acquisition matters a lot — if you bought before the new rule date, older taxation rules apply.

• Physical silver being an asset means you may also consider costs of storage, security, and risk of theft or damage — not tax, but relevant for net return.

• Losses from sale of silver (if sold at a loss) may have rules for carrying forward losses (check latest laws) — but losses and their offsetting differ by asset class.

4. Taxation of Silver ETFs

Next let’s focus on silver ETFs — funds you buy via stock exchanges that track silver’s price.

Classification and holding period

Silver ETFs are generally treated as non-equity oriented funds / debt-type assets for tax purposes (even though underlying is a commodity) under the present regime. That means their capital gains are taxed like debt/fixed-income assets rather than equity assets. 

In particular, for silver ETFs:

• If you hold units for less than 12 months → STCG (Short Term) (in many interpretations). Some sources used 24/36 months earlier, but recent clarifications put 12 months for ETF units purchased on or after a date. Rupeezy+1

• If you hold units for more than the threshold (12 months/24 months) → LTCG (Long Term) qualifies. For newer purchases the threshold is 12 months. Bajaj FinServ Markets+1

Tax rate on Silver ETFs

For LTCG and STCG in silver ETFs:

• STCG (held less than threshold): The gain is added to your total taxable income and taxed as per your slab rate. Paisa Forever

• LTCG (held beyond threshold): For units acquired on or after 1 April 2023 or after the date specified, the LTCG rate is 12.5% flat, without indexation benefit. Rupeezy+1

Example

You buy a silver ETF on 1 June 2024 for ₹50,000 and sell it on 1 August 2025 for ₹70,000 (holding >12 months). Your gain = ₹20,000. Since units purchased after April 2023, LTCG taxed at 12.5% → tax = ₹2,500.

If instead you sold on 1 March 2025 (i.e., before 12 months) your gain = ₹20,000, but it will be added to your income and taxed as per your slab (say you’re in 30% bracket → tax ~₹6,000 plus cess etc).

Notes & caveats

• The 12.5% LTCG rate applies only for units acquired after certain dates (see Fund’s scheme information) and after the budget change. For older units (acquisition before 1 April 2023), older regime may apply. Rupeezy

• The 1 lakh plus exemption on LTCG (applicable to equity funds/ETFs) does not apply to silver ETFs, since they are non-equity. (The exemption of ₹1.25 lakh LTCG is only for equity assets). > “The ₹1.25 Lakh LTCG Exemption: It Doesn’t Work Where You Think It Does.” Reddit

• Since silver is a commodity and the ETF is classified as “other than equity”, indexation benefit may not apply.

• Brokerage, Demat charges etc are overheads but don’t change taxation of gains.

5. Taxation of Silver Mutual Funds / Fund of Funds (FoFs)

When you invest in a mutual fund (or FoF) that invests in silver (or silver ETFs), tax treatment depends on how that scheme is classified and your holding period.

Classification: equity or non-equity

Mutual funds in India are taxed differently depending on whether they are “equity-oriented” (at least 65 % invested in Indian equities) or “non-equity funds” (less than 65% in Indian equities). Reddit+1

Silver mutual funds / FoFs (which invest in commodities/ETFs) are typically non-equity funds (because they invest in silver rather than Indian equities). That means they follow the tax rules for non-equity funds.

Holding period & tax rate

For such non-equity mutual funds (silver FoFs or similar):

• STCG (held up to threshold) → taxed as per income tax slab rate.

• LTCG → taxed at 12.5% flat (for units acquired after the relevant date) without indexation, depending on holding period threshold (e.g., usually > 24 months for FoFs) Rupeezy+1

Example

You invest in a Silver FoF on 1 January 2024 for ₹1,00,000. You sell it on 1 February 2026 for ₹1,30,000 (held >24 months). If the fund is non-equity and under the newer regime, LTCG = ₹30,000 taxed at 12.5% = ₹3,750.

If you sold earlier (within threshold), say on 1 December 2024, then the gain would be taxed as per your slab.

What about mutual funds that invest partly in silver and partly elsewhere?

If a mutual fund scheme invests a portion in silver but also a significant portion in equities, then classification matters. If the equity exposure is ≥65%, it may be treated as “equity-oriented” and taxed accordingly. 

If less, it will be non-equity. The scheme’s documentation (Scheme Information Document / SID) will identify classification. Axis Mutual Fund

Key points

• The benefit of indexation typically does not apply for silver mutual funds under new regime.

• The exemption of ₹1.25 lakh LTCG (applicable to equity funds) does not apply.

• As always, check the exact acquisition date to determine whether older rules apply.

6. Other relevant tax considerations for silver investments

Beyond just capital gains tax, there are other tax/transactional rules you should keep in mind when investing in silver.

GST on purchase of silver and silver jewellery

• As mentioned earlier, buying physical silver (bars/coins) attracts 3% GST on the value of metal. Jewellery has more complexity: the metal portion gets 3% GST, making charges get 5%. 

• Digital silver (fractional buying via platforms) also attracts GST (and sometimes storage fees) though currently the GST is aligned with physical silver. Upstox - Online Stock and Share Trading

TDS (Tax Deducted at Source)

• Generally, selling physical silver, silver ETFs or mutual funds does not attract TDS at source. 

• However, if you are a non-resident (NRI) or make large transactions crossing certain thresholds, TDS provisions may apply (for example under Section 195 for payments to non-residents, or Section 194Q for high value purchase by a buyer). 

Reporting in Income Tax Return (ITR)

• Gains from sale of silver or silver-ETFs or mutual funds must be reported in your ITR under “Capital Gains”.

• You should report the acquisition date, sale date, cost of acquisition, sale price, and type (short-term or long-term capital asset) to compute taxable gain.

• Use correct ITR form: typically ITR-2 if you have capital gains but no business income; ITR-3 if you have other income including business. 

Carry-forward of losses

If you incur a capital loss (sale price < cost) on silver investments, you may be able to carry forward the loss (subject to conditions) to set off against future capital gains of the same category. Check latest rules for such carry-forward period (typically 8 years for capital assets).

Acquisition cost & indexation

• For older purchases (before rule change), the cost of acquisition could be indexed (for inflation) for computing LTCG.

• But for schemes acquired on/after specified dates (e.g., silver ETFs purchased after April 2023/23 July 2024), indexation benefit may not apply. HDFC MF Files Bucket+1

Why the rules changed & what to watch

The Union Budget of July 2024 clarified the taxation of gold & silver (and related ETFs/FoFs) to simplify and standardize treatment. For example, the rules shortened holding periods, reduced LTCG tax rate for newer acquisitions, clarified non-equity classification. HDFC MF Files Bucket+1

For investors, key to watch:

• The date of acquisition of the asset.

• Whether the investment is equity-oriented or non-equity.

• Holding period.

• Whether indexation benefit applies.

• Whether the ₹1.25 lakh LTCG exemption applies (in most silver cases, no).

7. Summary Table: Taxation in Different Silver Investment Forms

Investment Form	Holding Period for LTCG	STCG Rate	LTCG Rate	Indexation Benefit	₹1.25 lakh LTCG Exemption Applies?
Physical silver (bars/coins)	> 24 months (post rule change)	Income tax slab rate	12.5% flat (for purchases on/after 23 Jul 2024)	No (for newer purchases)	No
Physical silver (earlier purchases)	> 24 months	Income tax slab rate	20% with indexation (for purchases before 23 Jul 2024)	Yes	No
Silver ETFs (units acquired post budget)	> 12 months	Income tax slab rate	12.5% flat	No	No
Silver ETFs (units acquired before specified date)	Varies (older regime)	Income tax slab rate	20% with indexation	Possibly yes	No
Silver Mutual Funds / FoFs (non-equity classification)	> 24 months (for FoFs)	Income tax slab rate	12.5% flat	No	No

Note: The thresholds above may differ by exact acquisition date and scheme documentation — always check the scheme’s SID and the date of purchase.

8. Practical Tips for Investors

Here are some actionable tips to help you manage your silver investments from a tax perspective:

1. Check the acquisition date: This is critical because the tax rate changes depending on whether you purchased before or after the budget rule change (23 July 2024 or 1 April 2023 etc).

1. Know the holding period threshold: If you plan to hold long term, it may pay off to wait until the LTCG threshold is achieved rather than selling earlier and paying higher slab rate.

1. Be aware of classification: If you invest in a mutual fund/FoF that mixes silver with equities, check whether the fund is classified as equity-oriented (≥65% equities) or not. That classification impacts tax.

1. Track cost of acquisition carefully, including purchase price, any making charges (for jewellery), storage or platform fees (for digital silver). Higher acquisition cost lowers taxable gain.

1. Keep documentation: Bills/receipts for physical purchases; Demat statements for ETFs; redemption statements for mutual funds; clearly showing date of purchase and sale, cost, units.

1. Plan transactions with tax in mind: If you are close to the threshold date (say 24-month mark), consider selling after completion of threshold rather than before, if your investment plan allows.

1. Consider your income tax slab: If you anticipate a high slab (say 30%), paying slab rate on STCG may hurt — so you might prefer to hold for LTCG if possible.

1. Don’t ignore GST: For physical silver, the cost at purchase already includes GST (3% or 5% depending) which effectively reduces net return. Factor that in.

1. NRI/Foreign investors: If you are a non-resident Indian (NRI), additional rules apply (TDS, tax treaties) so consult a tax advisor. The Economic Times

1. Stay updated: Tax rules can change with future budgets; what applies today may evolve.

9. FAQs on Silver Taxation

Q1: Does the ₹1.25 lakh LTCG exemption (applicable for equity investments) apply to silver ETFs or physical silver?
A: No. That exemption is only for gains from equity shares or equity-oriented mutual funds (where >65% is in equities). Silver investments are treated as non-equity and don’t get that exemption. 

Q2: Can I use indexation benefit for physical silver purchased recently?
A: For physical silver purchased on/after 23 July 2024, LTCG is taxed at 12.5% without indexation benefit. For earlier purchases the older regime (20% with indexation) may apply. 

Q3: If I buy physical silver jewellery, is the jewellery considered “investment” or “ornament”?
A: For tax purposes, if your jewellery purchase is genuinely for investment (and you can sell it later for a gain), capital gains rules apply. If it’s purely for ornament/use, tax treatment may differ. Keep bills/records. Also GST on jewellery includes making charges etc.

Q4: What about digital silver investments?
A: Digital silver (fractional purchases via platforms) is treated similarly to physical silver for GST and capital-gains taxation (as it replicates silver holdings) unless special scheme classification exists. 

Q5: What if I hold silver ETFs but sell after, say, 18 months?
A: If your holding period is less than the LTCG threshold (for example less than 12 months for newer purchases) then your gain will be treated as STCG and taxed as per your income tax slab.

Q6: Are the gains from silver ETFs added to “income from other sources” or “capital gains”?
A: They are capital gains (either short-term or long-term) because you are transferring (selling) a capital asset. They are not treated as “income from other sources”.

Q7: If I purchase a silver ETF via a SIP (Systematic Investment Plan) over time, how is cost considered?
A: Each tranche of your investment has its own acquisition date and cost. When you redeem, typically the units redeemed first will be those acquired earliest (FIFO basis) for tax calculation. Keep records of each lot.

10. Final Thoughts

Silver can be an appealing investment — especially for diversification, hedge against inflation or as part of a broader commodities portfolio. But taxation matters — because what you take home (after tax) is what really counts.

In India today:

• If you hold silver short term, you may end up paying your full slab tax rate on the gain.

• If you hold beyond the threshold, newer rules make LTCG tax lighter (12.5%) for many cases, which is good — but you still need to check your purchase date, scheme classification and documentation.

• Physical silver has additional costs (GST, storage) and slightly different holding period rules compared to silver ETFs and mutual funds.

• Silver ETFs and funds will never get the same tax benefits as equity investment (e.g., the ₹1.25 lakh LTCG exemption) unless they somehow qualify as equity-oriented (which most silver funds do not).

• Good practice: keep accurate records, know your holding period, classify correctly, and file your ITR appropriately.

  Silver Taxation Rules in India