How to Invest in Digital Gold in India

Digital gold is an alternative way to invest in gold digitally. You can buy the gold digitally and the same amount of gold is stored in insured vaults by the seller on your behalf. 

You can either take the delivery of the gold in the physical form or you can liquidate it in the digital form. You would need to pay additional making and delivery charges to take the physical gold delivery. 

You can start a gold investment with a small amount of Rs 1. Some popular platforms for digital gold are

  • Paytm 
  • PhonePe
  • Google Pay
  • Airtel payment bank 

All these fintech companies are the middlemen. The gold is actually sold by three companies in India 

  • AutmontGoldtech, 
  • MMTC-PAMP India, 
  • Digital Gold India. 

These companies actually procure and store the physical gold in secure vaults. 

Earlier you could invest in digital gold through your stock brokers like Zerodha and Groww. But in September 2022 SEBI banned the sale of digital gold for all the SEBI registered brokers. 

As of now, Digital gold falls in an undefined grey zone when it comes to regulation. You must consider this if you are planning to invest in digital gold. 

How Digital Gold Price is Calculated

The digital gold price is directly linked to the live gold market price. But the buy price is always higher than the selling price of digital gold. 

For example, in Paytm the buy price is Rs 6218 whereas the selling price is Rs 5992. 

digital gold buy and sell difference
digital gold selling price

The price difference is due to 3% GST along with additional handling and processing expenses. A total of about 3.75% charges. 

If you choose to take physical delivery then you would need to pay additional delivery and making charges. 

Due to the high cost, I don’t recommend digital gold to anyone. If you want to invest in gold then you can check the other methods to invest in gold. 

Benefits of Digital Gold

  1. Minimal Investment Requirement – You can start digital investment with as small as Rs 1. 
  2. No making charges – Digital gold does not involve any making charges, which can save you a significant amount of money. But if you choose to take physical delivery then you will need to pay making charges. 
  3. Fractional ownership – You can buy small fractions of gold, making it accessible to a wider audience.
  4. High liquidity – You can buy and sell Digital gold easily through many fintech platforms like Paytm, and Phonepe. 
  5. Secure – Digital gold is backed by physical gold reserves and is stored in secure vaults.

Drawbacks of Digital Gold

  1. Higher charge – A 3 to 4% fee is charged for GST, processing and handling charges 
  2. Regulatory risk – Currently digital gold is not regulated by any authority which associates a higher risk for the investors. 
  3. Additional charges – You would need to pay additional fees in terms of making charges and delivery charges to take the physical delivery. 

Step-by-Step Process to Invest in Digital Gold

Step 1 – Create an account with fintech companies such as Phone Pe, or Paytm that offer digital gold service

Step 2 – Search for the digital gold option. For example, in PhonePe search PhonePe gold.

buy digital gold in phonepe

Step 3 – Select the type of gold like 99.99% pure. Enter the amount that you want to invest. 

Buy digital gold

You can also enter the weight in grams. The other field will be auto-filled. Click on Buy. 

Step 4 – You need to make a payment through UPI. Once the payment is done, you will receive the digital gold in your account. 

digital gold in locker

How to Invest in Digital Gold Through Zerodha

Earlier you could invest in digital gold through but since Sep 2022 SEBI has banned the sale of digital gold for all registered brokers. So you can’t invest in digital gold through Zerodha. 

How to Sell Digital Gold

You can either sell it back to the digital gold provider or take the physical delivery and then sell it in physical form.  You would need to bear the additional cost of the second option (physical delivery). 

Steps to selling digital gold 

Step 1 – Log in to your digital wallet

Step 2 – Search for digital gold and select the option to sell. 

sell digital gold in phone pe

Step 3 – Enter the amount or weight that you want to sell. 

Sell digital gold quantity

Step 4 – click on confirm. 

Best Alternatives to Digital Gold to Invest in Gold

You can invest in other better options like investing in sovereign gold bonds or gold ETFs to invest in gold

Let’s compare all the options available.

Physical GoldSGBGold ETFGold MFDigital Gold
Investment limitsMin – No
Max – No
Min – 1 gram
Max – 4 kg
Min – 1 gram
Max – No
Min – Rs 1000
Max – No
Min – No
Max – No
CostMaking charges NoUpto 1%Upto 2.5%Upto 3%
Lock in periodNo8 yearsNoNoNo
ReturnsGold returns – making charges2.5% p.a + Gold returns Gold returns – costPerformace of the underlying asset – cost Gold performance – cost
TradabilityNoTradable on ExchangeTradable on ExchangeTradable on ExchangeNo

Conclusion

I don’t recommend investing in Digital gold to anyone. I would suggest investing in sovereign gold bonds. You will get 2.5% interest along with a price appreciation return. 

If you want to invest for short period then you can invest in gold ETF. 

FAQs

What is digital gold and how does it work in India?

Digital gold is an online investment product that allows you to invest in gold in small denominations. You can buy digital gold online through various platforms, which then hold the gold on your behalf.

Can anyone invest in digital gold in India or are there specific eligibility criteria?

Anyone above the age of 18 can invest in digital gold in India. However, you will need to have a valid PAN card to invest in digital gold.

How can I buy digital gold in India?

You can buy digital gold in India through various platforms such as Paytm, PhonePe, Google Pay, and many more. You can purchase digital gold in the form of grams, and the gold is stored in secure vaults on your behalf.

What are the charges associated with investing in digital gold in India?

The charges associated with investing in digital gold in India vary from platform to platform. You may have to pay up to a 4%  fee when you buy or sell digital gold.

What are the different platforms or apps available for investing in digital gold in India?

Some of the popular platforms for investing in digital gold in India are Paytm, PhonePe, Google Pay, and Augmont Gold.

Can I sell my digital gold investment at any time in India?

Yes, you can sell your digital gold investment at any time in India. You can sell your investment back to the platform from which you bought it, and the money will be credited to your account.

Is there any minimum or maximum amount for investing in digital gold in India?

The minimum and maximum amount for investing in digital gold in India may vary from platform to platform. Generally, the minimum amount is as low as Rs. 1, and there is no maximum limit for investment.

Is there any tax implication on investing in digital gold in India?

Yes, there are tax implications on investing in digital gold in India. The gains made on the investment are subject to capital gains tax as per the applicable tax slab.

Can I convert my digital gold investment into physical gold in India?

Yes, you can convert your digital gold investment into physical gold in India. You can either get the gold delivered to your doorstep or collect it from a designated center. You would need to pay making charges and delivery charges.

What happens in case of theft or fraud while investing in digital gold in India?

Digital gold is protected against theft or fraud as the digital gold is stored in secure vaults, and the gold is insured against theft or damage. However, you should always exercise caution and invest through reputable platforms.

Can I transfer my digital gold investment to someone else in India?

Yes, you can transfer your digital gold investment to someone else in India. Some platforms allow you to gift digital gold to your friends or family members.

How can I track the performance of my digital gold investment in India?

You can track the performance of your digital gold investment in India through the platform from which you bought it.

Can I buy small fractions of digital gold?

Yes, investors can buy small fractions of digital gold, making it accessible to a wider audience.

About Rajan Dhawan

Rajan has covered personal finance and investing for over 5 years. Previously, he was in the IT field for 8 years after completing his MCA but his deep interest in personal finance led him to become an investing expert. He is passionate about investing, stocks, startups, and cryptos.

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