buy gold During Diwali And Dhanteras India has a tradition. The demand for gold – especially physical gold in the form of jewelry and coins – increases during this time. However, in view of coronavirus Pandemic, when going to a jewelery store is still perceived as a risk, more and more people in India are investing in digital gold. Individuals can buy digital gold from sellers and refiners through various platforms. There are three companies offering Digital Gold – Augmont Gold; MMTC-PAMP India Pvt. Ltd., a joint venture between state-run MMTC Ltd. and Swiss firm MKS PAMP; and Digital Gold India Pvt. Ltd. with its SafeGold brand. One can buy digital gold through popular wallets including Paytm, Amazon Pay, Google Pay and PhonePe.
“Digital gold is increasingly attracting the attention of investors as it offers all the benefits of gold and others. Ashraf Rizvi, Founder and CEO, Digital Swiss Gold & Gilded said that it is simply physical gold purchased digitally and easily through a mobile app, which negates the need to visit the store.
Easy availability and low price are two reasons behind the immense popularity of digital gold in recent times. Important things you should keep in mind while buying digital gold
1) Accuracy: One of the first things investors should check before buying digital gold is purity. Pranjal Kamra, CEO, Finology said, “Digital gold purchased from MMTC-PAMP is likely to be more pure than gold purchased from the platform in association with SafeGold.”
2) Price starting from Rs.1: Digital gold price starts from Rs. Ashraf Rizvi of Digital Swiss Gold & Gilded said that by investing in digital gold, customers can buy fractional physical gold for small investments.
3) Storage: “The gold you buy is centrally stored and shown to you as the number of grams you have in the form of a digital vault balance. You can have this gold either with you,” said chief executive of 5Paisa There is an option to take delivery or sell directly from your vault on the app, said official Prakash Gadani.
4) GST and other charges: Buying digital gold will attract 3% GST on the value of your gold, just like buying physical gold. Digital gold providers charge an additional 2-3 percent for expenses such as the cost of storage, insurance and trustee fees. If the customer wants to convert digital gold into physical gold, then making charges will be levied on the basis of quantity. Investors may also have to pay an additional fee to have it delivered to your home.
5) Maximum Holding Period: Digital gold products have a maximum holding period after which the investor has to take delivery of the gold or sell it back. Different merchants impose different holding period conditions for digital gold.
“After holding your digital gold with MMTC-PAMP for 5 years, you will either have to sell the gold or convert it into gold coins. Hence, you need to read the FAQs carefully, especially regarding the holding period and investment limit, before buying digital gold,” said Pranjal Kamra, Finology.
6) Tax on Digital Gold: The holding period of digital gold determines how much tax the investor will have to pay. If the digital gold is held for less than 36 months, the return is not directly taxed. Long-term capital gains from digital gold attract 20 per cent tax along with applicable surcharge and cess of 4 per cent.
7) Injury: “A major disadvantage of buying digital gold is the lack of any regulatory mechanism in the digital gold space, whereas gold funds come under the regulatory jurisdiction of the Securities and Exchange Board of India (SEBI). Investors can easily invest in gold funds and they can be redeemed through mobile apps or websites of various mutual fund houses, investment platforms and marketplaces.
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