What is Digital Gold?

While saving tax or planning for the future, the first investment that comes to our mind is Gold. Generations have shown trust in this and it also gave a decent amount of return. But as technology is booming, digital gold is becoming quite popular. So in this article, we will cover what is digital gold and what is difference between physical and digital gold.

Image Source- Google | Image by The Economic Times

What is Digital Gold?

Digital gold is nothing but a convenient and cost-effective way of purchasing gold online in small fractions. The gold that you purchase is managed and stored in secured vaults. Thus overcoming the major drawback of physical gold i.e security and maintenance. Every unit of digital gold purchased by an investor is 99% 24K pure gold.

There are three companies in India that offer digital gold. They are:-

1)Augmont Gold

2)MMTC-PAMP India Pvt. Ltd.

3)Digital Gold India Pvt. Ltd. (also known as Safegold)

What are the advantages of investing in digital gold?

1.)No Storage Cost

The gold that you purchase online gets stored in safe vaults at no extra cost. It is also insured so that if anything goes wrong then your investment is safe.

2.)Purity

Buying digital gold is genuine and purity is 99.5% for SafeGold and 99.9% in the case of MMTC PAMP.

So purity is not a major concern in digital gold.

3.)Affordable

Digital golds are affordable as compared to physical gold because you can buy them with minimum investment amount starting at only ₹10.

4.)Buy at live gold prices

You can buy gold at prices that are live in the market and sell them at any time (24X7) and at your convenience.

5.)Physical Delivery

You can exchange digital gold for physical gold and can get delivery for it. However, you have to pay for making and delivery charges. There are some minimum weight criteria(varies for different companies) for getting delivery of gold.

Disadvantages of investing in Digital Gold

There are only a few limitations while investing in digital gold

1.)You can buy digital gold only up to ₹2lac on most platforms.

2.)Buying digital gold will attract 3%GST over the cost of gold just like physical gold.

3.)There is no official authority assigned by RBI or SEBI to look after it.

4.)Delivery and making charges if you opt for delivery. 

How are digital golds taxed?

The taxation on digital gold is as same as that of physical gold. 

Taxation in digital gold are mainly of two types:

Short Term Capital Gain(STCG) and Long Term Capital Gain(LTCG) tax

Short Term Capital Gains(STCG) Tax

If you sell gold within 36 months from the date of purchase, then it accounts under STCG tax.

It will be taxed according to your income tax slab.

Long Term Capital Gains(LTCG) Tax

Gold sold after 36 months accounts under LTCG tax. You have to pay 20% tax on returns along with a surcharge and 4% cess.

How to purchase digital gold?

There are many third-party apps like PhonePe, Upstox, Paytm, Google Pay and Groww where you can invest in digital gold in just a couple of minutes. You can purchase gold either by price(varies by app to app and in some cases is as low as ₹10) or by weight(minimum 1 gram).

Hope you enjoyed the blog.

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