Buying gold has always been a tradition and a trusted form of investment in India. But times are changing, and technology has found a way to make even gold go digital. Today, you can buy gold online without ever touching it, store it safely in a secure vault, and even sell it instantly with a few clicks. This new-age investment, known as digital gold, is gaining popularity, especially among young investors who prefer convenience and transparency.
But before you jump in, it’s important to understand what digital gold actually is, how it works, and what taxes apply when you invest.
What is Digital Gold?
Digital gold is simply gold that you can buy online in small or large amounts, without physically holding it. For every rupee you invest, an equal amount of 24K gold is stored in an insured vault by the provider in your name. You get the flexibility to start small, even with just Re 1, and your gold’s value moves in sync with the market price of physical gold.
Unlike buying gold jewellery, you don’t have to worry about purity, storage, or making charges. You can invest anytime using your phone or laptop and view your gold balance instantly through the app or website. It’s a modern way to invest in gold that fits perfectly into the digital lifestyle most of us live today.
How Does Digital Gold Work?
When you buy digital gold, you aren’t just getting a digital token or a promise. The company you buy from actually purchases real, physical gold and keeps it in a secure vault on your behalf.
In India, three major companies currently offer digital gold:
- Augmont Gold Ltd.
- MMTC-PAMP India Pvt. Ltd., a joint venture between MMTC and Swiss refiner MKS PAMP.
- Digital Gold India Pvt. Ltd. (SafeGold)
Most people access these companies through apps like Paytm, Google Pay, PhonePe, HDFC Securities, and Motilal Oswal. When you invest through any of these platforms, your gold is managed and stored safely by one of the above providers.
How to Buy or Sell Digital Gold
The process of investing in digital gold is simple and user-friendly. You just need to sign up on a platform that offers it, complete your KYC, and decide how much you want to invest. You can choose the amount either in rupees or grams, based on the current gold price. Once you pay through your preferred method, your account is instantly credited with the equivalent quantity of gold.
You can sell your holdings anytime on the same platform and get the value credited to your bank account. Some platforms even let you request physical delivery of your gold as coins or bullion, though delivery and making charges will apply.
This flexibility makes digital gold appealing to those who like liquidity and control over their investments.
Benefits of Investing in Digital Gold
One of the biggest advantages of digital gold in India is accessibility. You can start with as little as Re 1 and build your investment over time. There’s no need to visit a jeweller or worry about theft or purity issues. Every gram of gold you buy is 24K and fully insured.
Another benefit is liquidity. You can sell your gold anytime, unlike traditional gold, which may involve negotiation or physical verification. Some lenders even accept digital gold as collateral for short-term online loans, making it a versatile asset.
You can also convert your digital gold into physical gold whenever you want, giving you the best of both worlds: the convenience of digital and the tangibility of real gold.
Disadvantages of Digital Gold
Like any investment, digital gold has its limitations. Most platforms allow investments only up to Rs 2 lakh, which can be restrictive for high-value investors.
It is also worth noting that digital gold is not yet regulated by authorities like the RBI or SEBI. This means you’re relying on the credibility of private companies to manage and store your holdings safely.
Some platforms offer free storage for a limited time, often five years. After that, you’ll need to either sell your holdings or take physical delivery. Additionally, delivery and making charges apply when converting your digital gold into physical form.
Taxes on Digital Gold in India
The taxation of digital gold changed in 2024, following the government’s new rules for gold-related investments.
From July 23, 2024, a flat 12.5 per cent tax applies on long-term capital gains (LTCG) for physical gold, digital gold, gold ETFs, and gold mutual funds. Earlier, investors could use the indexation benefit to reduce taxable gains, but this benefit is no longer available.
If you sell Sovereign Gold Bonds (SGBs) before maturity, the same 12.5 per cent LTCG tax applies. However, if you hold SGBs until maturity, your returns remain completely tax-free.
When buying gold, no income tax is charged, but you still pay:
- 3 per cent GST on the gold value
- 5 per cent GST on making charges
For digital gold, the tax implications depend on how long you hold it:
- If you sell within 24 months, gains are considered short-term and taxed at your income tax slab rate.
- If you sell after 24 months, gains are long-term and taxed at a flat 12.5 per cent.
The same rule applies to gold ETFs and gold mutual funds, except the short-term period is 12 months instead of 24.
Is Digital Gold a Good Investment?
Digital gold offers an easy, transparent, and safe way to invest in gold without the hassles of physical handling. It suits investors who prefer flexibility and want to start small. However, it’s important to remember that it is not meant for long-term storage or for those who wish to invest large sums.
For small investors or those looking to build a gold portfolio gradually, digital gold can be an excellent starting point. On the other hand, if you’re seeking tax efficiency or government-backed security, Sovereign Gold Bonds or Gold ETFs might be better options.
Ultimately, your choice depends on your investment goals, holding period, and comfort with digital assets.
Final Thoughts
Digital gold has simplified the process of investing in this timeless metal for Indians. It has made gold ownership more democratic and accessible, especially for younger generations who prefer mobile-first investments. However, like all investments, it requires an understanding of and awareness about taxes, storage limits, and withdrawal options.
If you’re planning to invest in digital gold in India, start small, learn how the platform works, and diversify your investments once you’re comfortable.
If you would like personalized guidance on choosing the right digital investment options and building a profitable money strategy, feel free to book a 1-on-1 consultation with me.
Very informative and well-researched article!
Very informative post! You’ve clearly explained how digital gold works and the impact of the new tax rules. It’s great to see how convenient and secure this investment option has become for Indian investors. Unlock tech secrets and updates—learn more on our website populartechworld.com.