Digital gold vs. physical gold: Times have changed, systems have changed, but gold’s reign remains. Gold has always been a trusted investment in India, offering both sentiment and security. Digital gold has emerged as a new and convenient option for investing in gold. However, in the last few years, buying gold has become digital. Platforms like Paytm, PhonePe, and Groww now allow you to purchase gold stored in insured vaults for as little as ₹10. So, let’s explore the difference between digital and physical gold and which option may be better for you. Physical gold includes jewellery, coins, or gold bars. It can be worn or gifted, but it incurs making charges and GST.
Digital Gold
With digital gold, you invest in 24-carat gold online without worrying about storage or making charges. Your digital gold is backed by bullion secured by trusted companies like MMTC-PAMP or SafeGold. You can sell it at any time or even order it physically. This flexibility makes it ideal for small savers or those who want to accumulate gold gradually.
It offers liquidity; you can sell it at any time. There’s no worry about storage or theft. Under this scheme, the buyer receives 24-carat pure gold at a price fixed in real time. Digital gold is subject to the same tax rules as physical gold. If you sell digital gold within 12 months of purchase, it is considered a short-term capital gain. If digital gold is held for 12 months or more, the profit is taxed at 12.5 per cent.
Physical Gold: Is It Safe?
Physical gold is a traditional and tangible investment medium. It includes gold coins, biscuits, and jewellery. It is most commonly used for weddings. Physical gold can be stored at home or in a bank locker. A 3% GST is payable at the time of purchase. When purchasing jewellery, they also have to pay a making charge, which typically ranges from 10% to 20%. These additional expenses make physical gold more expensive than digital gold. When you buy gold jewellery, you pay more than the actual value of the gold. Therefore, physical gold is not considered a profitable short-term investment.