Investing in Digital Gold: Here’s What You Need to Know

Over the years, gold has been one of the most trusted investment vehicles in India due to its safe-haven nature. Indians have traditionally purchased jewellery, coins, and bars to gain exposure to the gold price. But things have changed today; there has been a major shift in gold investment with the rise of fintech and online investing. In this loop, digital gold has emerged as a convenient option for modern-day investors.

With investment in digital gold, investors are allowed to buy, sell and store gold online without holding it physically. Individuals can start investing with as little as ₹10, making it available to small investors as well as experienced ones.

It is important to note that digital gold is not notified as securities and not regulated as commodity derivatives by SEBI. So they may expose investors to counterparty and operational risk.

What is Digital Gold?

Digital gold is a type of investment where investors purchase gold online, and the equivalent quantity of physical gold is stored securely by the platform provider in insured vaults. The value of the investment increases or decreases in line with the prevailing gold prices.

There are several payment apps, jewellers, and fintech platforms that provide digital gold investment services. Individuals can buy fractional quantities of gold and redeem them for cash or physical gold later.

What SEBI Says on Digital Gold Investment

On November 8, 2025, the capital market regulator, the Securities and Exchange Board of India (SEBI), issued a caution relating to investment in digital gold and e-gold products offered by online platforms.

SEBI-regulated gold products include Gold ETFs, exchange-traded commodity derivatives and electronic gold receipts, while digital gold/e-gold offered by online platforms is outside SEBI’s purview. SEBI said that digital gold products are not under the purview of the regulator.

SEBI stated that “Such digital gold products are different from SEBI-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI. Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks.”

How Does Digital Gold Work?

Digital gold enables investors to buy gold online without physically holding it. Whenever an individual buys digital gold, the platform purchases an equivalent quantity of physical gold on their behalf at the current market price.

Let’s say the gold is priced at ₹15,000 per gram, and an investor buys digital gold worth ₹1,500; they effectively own 0.1 gram of gold.

The gold is stored securely in insured vaults, which are managed by authorised custodians, while the investor’s holdings are reflected through the app or website. Investors can keep track of their investments in real time, buy additional gold, or sell their holdings anytime for cash or physical gold.

How Can You Invest in Digital Gold?

Investing in digital gold is simple and transparent. Investors can follow these easy steps to invest in digital gold:

Step 1: Select a reputable platform that partners with established bullion providers. Investors should look for transparency regarding:

• Purity of gold
• Storage arrangements
• Buy/sell spreads
• Redemption policies
• Audit certifications

Step 2: Various platforms require PAN and Aadhaar-based verification for larger transactions. Completing the KYC process ensures compliance and smoother transactions.

Step 3: Decide your investment amount. Individuals can start with as little as ₹10 and gradually accumulate gold over time via systematic purchases.

Step 4: Investors should monitor gold prices regularly and can sell digital gold instantly for cash or physical gold.

Who Should Avoid Investing in Digital Gold?

Digital gold can be a convenient investment option, but it may not be suitable for everyone. The following groups of investors should think carefully before investing in it:

• Investors looking for high long-term returns may want to avoid digital gold, as it usually offers moderate growth compared to equities.
• People who need regular income or dividends should avoid it because digital gold does not generate cash flow.
• Those uncomfortable with online investment platforms or digital transactions may find it unsuitable.
• Investors planning to invest large amounts may face concerns related to storage fees and platform risks.

Advantages of Investing in Digital Gold

• Convenience: Digital gold provides an ease of buying and selling gold through mobile apps without visiting a jewellery store.
• Low Entry Barrier: Investors can start investing in digital gold with very small amounts, making it ideal for consistent investing.
• Safe Storage: Investors need not worry about theft or locker charges since the gold is stored in insured vaults.
• Purity Assurance: The investor can relax about purity since most digital gold providers offer 24K gold with standardised purity.
• Liquidity: Investment in digital gold is highly liquid as most of the platforms provide instant selling options, allowing quick access to funds.

Risks of Investing in Digital Gold

• No Regulatory Framework: SEBI has cautioned investors about investing in digital gold, as it is neither notified as a security nor regulated as a commodity derivative.
• No Physical Access to Gold: Despite the backing of physical gold, you do not physically hold it, raising some concerns for investors who prefer investing in tangible assets.
• Storage and Security: Although digital gold eliminates the requirement for physical storage, investors may still have concerns related to safety, transparency and security of digital gold holdings.

Taxation on Digital Gold Investments

Digital gold is taxed broadly like physical gold. Tax applies at two stages: GST on purchase and capital gains tax on sale.

• Goods and Services Tax (GST): At the time of investment in digital gold, you pay a mandatory 3% GST, which is added to the buying price.
• Short-Term Capital Gains (STCG): If you sell your digital gold investment within 24 months, then the income generated is considered STCG, added to your annual income, and taxed as per your slab rate.
• Long-Term Capital Gains: If you hold and sell digital gold after 24 months, the gains are qualified as LTCG and are taxed at a flat rate of 12.5%.

Difference Between Physical Gold, Digital Gold and Gold ETFs

FAQs

What is digital gold?

Digital gold is an online investment product that allows investors to buy, sell, and hold gold digitally without physically storing it.

Is digital gold safe?

Digital gold is generally stored in insured vaults, but it is not fully regulated like Gold ETFs or mutual funds.

What is the minimum amount required to invest?

Most platforms allow investments starting from as low as ₹10 or ₹100.

Can I convert digital gold into physical gold?

Yes, many platforms offer redemption options in the form of gold coins or bars, subject to delivery charges.

Is digital gold regulated by SEBI?

No, digital gold is currently not regulated by SEBI, unlike Gold ETFs and other exchange-traded products.

How is digital gold taxed?

Digital gold is taxed similarly to physical gold, with capital gains tax applicable on profits from sale.

Can I sell digital gold anytime?

Yes, most platforms provide instant selling options based on prevailing gold market prices.

Which is better: Digital Gold or Gold ETF?

Digital gold offers convenience and small-ticket investing, while Gold ETFs provide stronger regulatory protection and transparency.