Investing in digital gold? Here’s a breakdown of fees, risks, and taxation
Gold has long been considered a safe asset in India, traditionally purchased in the form of jewellery, coins, or bars. With the rise of fintech platforms, investors are increasingly turning to digital alternatives such as Digital Gold, Gold Exchange-Traded Funds (ETFs), and Gold Mutual Funds.
Digital gold, in particular, has emerged as a popular option for new-age investors due to its convenience and low entry barrier. Unlike physical gold, digital gold can be purchased online, while the equivalent quantity of gold is stored securely in insured vaults by the issuer on behalf of the buyer. The best part? You can start investing with just ₹ 1.
If you are also planning to invest in digital gold, here’s a breakdown of fees, risks, and taxation.
Benefits of digital gold?Accessibility and Affordability: One of the biggest advantages of digital gold is accessibility. Investors can start with as little as ₹ 1, making it an attractive option for those looking to build a gold portfolio gradually.
No Storage Hassles: Digital gold eliminates storage concerns, as the gold is held in bank-grade vaults with guaranteed security and insurance coverage, reducing risks of theft or loss. stored in bank-grade secured vaults.
High Liquidity: Additionally, digital gold offers high liquidity, allowing users to buy or sell instantly at prevailing market prices through mobile apps.
Transparency and Real-Time Tracking: Most platforms provide real-time tracking of gold prices and holdings, allowing you to track current market value in real time with digital certificates of ownership and regular pricing updates.
Purity Assurance: Unlike physical gold, where purity issues may arise, digital gold guarantees 24-karat purity certificates by government agencies, eliminating concerns about counterfeit metal.
Taxation in India (2026)
Tax on digital gold depends on the holding tenure of the asset, as follows:
Short-Term Capital Gains (STCG): If sold within 24–36 months, the gains are added to your income and taxed according to your income tax slab.
Long-Term Capital Gains (LTCG): If held for more than 24–36 months, profits are treated as LTCG and taxed at around 20% with indexation benefits.
Risks Associated with Digital Gold Regulatory Grey Zone: Digital Gold falls under the regulatory grey zone and is not under any financial sector regulator such as SEBI or RBI.
Storage Risk: While platforms claim insurance, your gold is held in vaults by third-party custodians. This means you rely on the platform’s security measures.
Platform Dependency: Your investment relies entirely on the digital platform’s stability, security, and continued operation.
Making Charges: Another concern is cost. While buying digital gold is straightforward, converting it into physical gold can attract charges ranging from 8% to 25% depending on the product. Investors should also be aware of potential spreads between buying and selling prices.
Technology Risks: Cybersecurity threats, technical glitches, or platform failures could temporarily affect access to your investments.