digital gold Archives -

What You Should Know Before Buying Digital Gold?

Sat, 24 Sep 2022 03:03:29 +0000

The Buyt Desk

Buying Digital Gold is as good as buying Physical Gold but much easier and quicker. There are many benefits of digital gold but let us understand a few facts.

Indians are fond of gold both in the form of wearable and investment (coins and biscuits). And buying gold was not an easy task. Now that digital gold is in the market, buying and selling gold has become a cakewalk. Now, one can buy the most loved metal online in just a few clicks and similarly sell it too. Digital gold can be brought for any amount even as small as Rs 100 and also need not worry about storing the gold and its safety. You can buy the digital gold yourself without the help of a broker, or agent and also you don’t need a Demat account. If not physical gold, digital gold, gold exchange-traded funds (ETFs) and sovereign gold bonds are the options.

What is Digital gold?

Digital gold is also physical gold which is bought online but stored in a secured vault with the seller on the customer’s behalf. An equivalent weight of physical gold is parked in the secure vault. It can be easily brought on many digital platforms. Digital gold is a good option for risk-averse millennials and young investors as they will hold the gold virtually. This is a perfect platform to park one’s money in a versatile and liquid gold investment without owning a safe or bank locker.

Where to buy Digital Gold?

Many payment wallets and financial service provider apps sell digital gold. Investors can buy gold in small amounts or can incrementally build gold holdings. Later digital gold can be sold or converted to physical gold in the form of coins and ingots.

What you should know before buying Digital Gold?

Investment in the yellow metal has always been profitable and encouraged in our society. So has digital gold lived up to its promise. It is the rebirth of conventional physical gold and is considered a strategic investment asset. Below are a few things you should know before investing in digital gold –

Quality assurance – Always do due diligence before investing in digital gold. Confirm the quality of the physical gold that you are buying. Check with your seller about the gold purity and get the certificate of gold purity. There are exclusive 24k gold sellers which is the highest purity of gold.
No limit to buy – There is no limit on the quantity of digital gold that can be purchased. Even digital gold worth Rs 100 can be brought and there is no upper limit established. Just like gold purchases from any offline stores, for purchases above Rs 1.5 lakh these platforms ask for additional know your customer (KYC) details.
Know the price spread – In such platforms, a higher price is charged for gold buyers than the price offered to gold sellers. This difference in the price of selling and buying is known as the spread. For digital gold, this difference is usually 2-3%. This includes credit card or bank payment charges of 1-2%. Also 3% GST is levied on gold purchases and this is a loss when non-GST registered customers sell it back.
Tax invoice – There are many online sellers and platforms that deal with digital gold. Not all platforms are direct sellers but conduits between buyer and seller. PhonePe, PayTM and Amazon are a few such platforms. SafeGold, MMTC-PAMP India, and Augmont are direct digital gold sellers in India. Customers’ transactions of both buying and selling digital gold are reflected in their digital gold accounts. And through their digital gold account, one can download the invoice. Even the Seller emails the buyer a valid Tax Invoice.
No central digital gold authority – There is no regulatory authority for the digital gold industry even after the rapid growth. So it is the investor’s responsibility to do the necessary due diligence before investing in digital gold. Recently SEBI has entered into bar stock brokers from selling digital gold. But structural guidelines are still awaited.

Summing up

If you are a new investor in digital gold, be mindful of the above 5 points. This should be good enough to embark on a profitable investment journey. Keep yourself updated on the latest developments in the digital gold industry. There may be new updates soon.

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Physical Gold Vs Digital Gold – Know Which One is Best for You

Thu, 16 Dec 2021 08:54:57 +0000

The Buyt Desk

Gold is very auspicious for Indians and a go-to investment. There are various ways to invest in gold. Gold can be either brought in physical form or in digital form.

Indians mark every auspicious occasion and celebrations with the purchase of gold, be it festivals, weddings, house warming, birthdays, anniversaries or birth of a child. Gold is consumed in many forms, from gold jewelry to gold articles to gold coins to biscuits. Nowadays even gold in digital forms is gaining popularity in India. Before investing in gold, let us understand what physical and digital gold mean and its pros and cons.

What is Physical Gold?

Gold, the yellow metal always has demand and value. Over decades its demand is only increasing in spite of its inflated rates. Indians still consider gold or land as the best investment option. Gold is mostly brought for use as jewelry or household articles and few buy gold in form of coins and biscuits for gifting purpose. This form of buying gold is physical gold where the gold is physically with the buyer.

Physical gold can be purchased from a gold merchant/jeweler or a bank (only coins) directly. Universally physical gold is accepted in exchange of cash making it highly liquid. The price of physical gold varies from jeweller to jeweller and region to region. The resale value of gold articles and jewels are lesser compared to gold coins and bars.

What is digital gold?

Digital gold is an alternate way to buy gold. Digital gold is a mechanism where one can buy a digital form of pure gold from a seller. The seller keeps the physical gold in secured vaults on behalf of buyers. The buyer gets the invoice for the gold he has brought and the same is reflected in vault balance at the service provider. The buyer can continue keeping in the vault or take possession of the gold in form of coins or jewels or sell it anytime at live market rates. Digital gold investment is regarded as a cost effective and effective way of building assets. The purchase and sale of digital gold happens online at market prices, thus it is a transparent transaction. Here any amount of gold with 24k purity can be brought, even gold of Rs.100 can be brought.

Ways to buy digital gold

Digital gold in India can be bought from multiple websites and apps. Digital gold is sold only by three entities – Produits Artistiques Métaux Précieux, Switzerland (PAMP), Augmont Limited, a joint venture between state-owned Metals and Minerals Trading Corporation of India (MMTC) and SafeGold brand of Digital Gold India Pvt. Ltd. Service providers like Amazon Pay , PhonePe , Google Pay, and PayTM, have tied up with these three entities to sell digital gold via their platforms. Now even jewelers like Kalyan Jewellers, Senco and Tanishq are also offering digital gold through similar tie-ups. Investors can open digital gold accounts either directly with the refiner or with the partner online platforms. One can buy the quantity of gold as per weight (grams) or value of gold (Rupees) after completing the KYC process.

Taxation on both physical and digital gold

Capital gains from investment in physical and digital gold are taxable as per the period of holding the investment. The gains are taxed as per the income tax slab when the gold is sold before 36 months from date of purchase. The long term capital gains tax (LTCG) of 20% with indexation benefit is levied on the gains of gold sold after 36 months from date of purchase. Moreover, there is a cess of 4% and surcharge if applicable.

Pros and cons of Physical Gold

Buying physical gold has its own pros and cons alongside being the most desired precious metal. People still buy more physical gold, so let us look into pros and cons of physical gold.

Pros

Physical gold doesn’t depreciate over time so it is a good asset which is wearable.
Physical gold has resale value. And can be easily sold to authorized institutes or known people including family members and relatives and can be reclaimed once you have enough money.
Physical gold is regarded as an inflation-proof investment. And hence even a good choice for gifting.
Physical gold’s intrinsic value as an asset is not lost. History shows us that gold can be easily sold during a crisis.
Quick loans can be availed by pledging the physical gold.
Physical gold can be passed onto the next generations as an asset and wearable.
Asset for many generations to come.

Cons

Physical gold has a higher cost of carrying and storing. Safes charge hefty fees.
Physical gold has high making charges more than 20% most of the time.
Ornaments and articles are of at least 2 grams and investment will be high. No physical gold is available below 4-5 thousand.
Physical gold always has a risk of theft.
Purity cannot be guaranteed if not certified. Ornaments are made using gold of varied purity.
A wealth tax is levied on physical gold buyers on purchase of Rs.30,00,000/- and above.

Pros and cons of Digital Gold

People are aware of digital gold and want to know more about it. There are also people who without understanding pros and cons have invested in digital gold. Let us understand the pros and cons of digital gold.

Pros

Small amounts of investment can be done into digital gold. Even gold of value Rs.100 can be brought. Digital gold is good for small investors.
Only gold with purity 24 karat gold can be bought on online platforms. Purity is guaranteed.
Redemption of digital gold is quick and easily as it can be redeemed as physical gold coins or bars.
Digital gold can be easily cashed out online and hassle free.
Digital gold can easily be sold in small units and not empty the safe.
Digital gold is also considered as collateral for loans.
Digital gold is insured and safely deposited in a vault.
Digital gold has zero risk of robbery.
Digital gold can be tracked online for better investment insight.
Digital gold has real-time gold rates making it easier for investors to make purchases or sales based on price movements.

Cons

Digital gold cannot be worn.
Safety of digital gold is charged after 5 years. A vault fee is collected from the investor.
There is a limit on the number of years gold can be held in digital form.
Digital gold cannot be bartered but always sold.

Summing up

After going through pros and cons of both digital gold and physical gold you might be having a good insight. The preference of investment solely depends on the investor’s purpose. Digital gold is a good choice if the sole purpose of buying gold is as an investment for a short duration. Physical gold is a good choice if the purpose is consumption and asset building for next generations. An investment portfolio should always be diverse and with around 10%-30% of gold either digital or physical is considered a healthy investment choice as it gives hedges against inflation risk, currency risk and volatility.

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Digital Gold- The ‘Gold’ That Fits In Your Budget

Thu, 04 Nov 2021 04:23:36 +0000

The Buyt Desk

The festival is the time when the demand for gold reaches a peak. Everyone wants to buy gold. What comes as a spoiler is the rising price of gold. The per gram cost of gold is in thousands. At present in November 2021 the price of gold is hovering around 48,850 for 10 grams of gold. But don’t let the price of gold stop you from buying it. Digital Gold could be a good option for those who want to buy gold as per their budget. The digital avatar of gold enables you to buy gold for as low as Rs 1. The digital gold has not only made the process of buying and selling gold easier but also within the reach of people in different income groups. It has witnessed a surge in popularity. Currently, over 1 million people in India have digital gold.

What is Digital Gold?

You can buy it and sell it but can’t see it or feel it. This is how digital gold can be best described. It is very much like buying a gold coin or an ornament from a jeweller but instead of a jeweller, you buy digital gold from various fintech platforms. Even several jewellers are also offering digital gold. Unlike physical gold, you don’t get to keep the gold but it is kept in vaults by the seller for their customers. You can buy or sell any amount of gold with 24 Karat purity and hallmark.

There are many advantages to buying digital gold, says the industry expert. Here are the top benefits of investing in digital gold this festival season.

1. Physical gold is often purchased in the form of jewellery, which also includes the making charge in addition to the value of gold used in it. In India, jewellery is often not sold or mortgaged because of sentiments and prestige issues. So, once you have purchased jewellery, it becomes more a consumable item than an investment.

2. With physical gold, there is always a risk of losing it. It is not the case with digital gold. Because here, the seller keeps it in a vault for customers. There is no chance of losing this gold.

3. Physical gold is purchased in multiples of grams which is approximately Rs 4,800 at present. On the other hand, you can buy digital gold for any amount. It can be as low as Rs 1. You can also sell this gold anytime to meet your financial emergency. When you sell digital gold, the money instantly gets credited into your account. There would not be any deduction as digital gold is 24 karat hallmark gold.

4. You can also invest in digital gold on every festival season as there are no restrictions on the minimum amount required to buy. At present, when the gold price is at its pinnacle, it has gone far from the budget of middle and low-income group people. With digital gold, you can invest according to your convenience. You can use it for gifting purposes also. Just like you give physical gold to your loved ones, you can give them digital gold depending on your budget.

5, Digital gold assures you of purity, convenience and liquidity. You can buy it anytime, just like you do online shopping. There is no need to visit any jewellery shop to buy gold.

Disadvantages with Digital Gold

If you are gearing up to invest in digital gold you must know that there are yet no rules and regulations governing digital gold. It is fairly new and has no regulatory mechanism. Thus, you must invest in digital gold only through trusted platforms. Secondly, whenever you buy or sell digital gold you will have to pay a GST of 3%. As far as income tax is concerned if the minimum holding period is 3 years. If you sell the digital gold within 3 years of its purchase then short term capital gains tax will be imposed. The gains will be added to your income and you will be taxed per your income tax slab. If you hold it for three years and sell it then a long term capital gains tax of 20% is levied along with a 4% cess. Also, consider a service or the maintenance cost of 2-3% that will be charged by the platform from whom you will buy the digital gold.

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Buy Gold in Just Rs 1! Digital Gold is Making this Possible

Sat, 07 Nov 2020 04:10:05 +0000

Priyanka Sambhav

Gold never loses it lustre as an investment. Everyone wants to possess it whether prices are soaring high or slipping to new lows. When prices move downwards, people want to buy gold and when its touching new highs those who have invested are celebrating gains and those who have not invested wait for a dip.

What is Digital Gold?

I am sure you also want to own the yellow metal, and if you own it, then you want more of it. To cash in on the ever-burgeoning demand of gold many mobile payment wallets like Paytm, Phonepay, Google pay are offering you a new way of buying gold i.e. digital gold. Few jewellers are also offering it through their app and website. The most significant feature of digital gold is that a consumer can buy 24Karat 99.9% purity certified gold for as low as Rs 1. It is precisely like purchasing gold only that you don’t get to possess the physical gold.

How can you buy?

You can buy digital gold online through wallets like Paytm, Google pay and Bharat Pe or some financial institutions like Motilal Oswal and Baja Finserv or from Stock Holding Corporation India. These platforms are selling gold in collaboration with three companies – state-owned MMTC- PAMP (Produits Artistiques Métaux Précieux), Safegold and AUGMONT enterprises. The fineness and purity may differ from company to company, and that’s why you will find a price difference between the wallets. The purchased gold is kept in a fully secured vault. When you want to sell the gold, you can do that in the respective platform and money will be credited to your account. If you wish to get physical gold then you request for delivery too. Digital gold will be converted into either coins or bullions and delivered to your doorstep. Keep in mind that rules and charges will differ from one platform to other.

Advantages of Digital Gold

You purchase the gold digitally from the recognized provider and they store the gold for you so need not be worried about storage, safety and purity.
The cost involved depends upon how much you want to invest? As low as Rs 1 to Rs 10,000 – it is up to your payment capacity; it lets you buy a small quantity. One can even buy 0.50 gm of digital gold.
Some platforms allow Systematic investment option as well. You can plan a monthly SIP.
Ease of liquidity with it gives this investment a big plus point. You can redeem it just by a click of a button and multiple redemptions is allowed.

Disadvantages of Digital Gold

You should know that no regulator is overlooking the digital gold process. The digital platform purchases it and stores it in the vault but who is checking the quality and quantity of the gold? No one! In case of Gold ETF there is SEBI and incase of Sovereign gold bond RBI regulates it, but as far as this gold is concerned there is no regulator.
You will have to pay a storage charge. If you decide to take physical delivery, then you will have to pay delivery charges and making charges as well.
There is a cap on the investment period by a few of the companies. Like investors of MMTC- PAMP’s digital gold have to mandatorily take delivery or sell the digital gold after a tenure of 5-years, or else you will have to pay extra charges.

Tax on Digital Gold

When you buy digital gold, you will pay 3% GST on it.
If you sell it within 3 years of purchase, you will have to pay short term capital gains tax. The earned profit will be added to your income and you will be taxed according to your income slab.
When you sell it after 3 years, then you will pay long term capital gains tax of 20% + 4% cess with indexation benefit on the price.

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