What are Electronic Gold Receipts? How NSE’s gold EGR scores over other digital gold formats

The country’s leading bourse- NSE- in view of the fascination as well as lucrativeness of gold as an investment, and to make the instrument far more appealing, cost-effective, transparent and investor-friendly, has now come up with the Electronic Gold Receipts. The new gold investment format is being acclaimed as the most efficient digital gold investment format.

Now, before we discuss more about the benefits of the instrument or how it scores over other digital gold formats, and even physical gold, here is a brief about NSE’s Electronic Gold Receipts.

In simple words, EGRs are the dematerialised edition of physical units in gold, held securely in SEBI-accredited vaults. Each EGR is fully backed by physical gold and is tradable on the exchange, seamlessly integrating gold into the formal financial system.

Thus, the novel innovative instrument, leveraging NSE’s robust technology and liquidity framework, facilitates electronic holding, with a seamless convertibility between physical and digital formats.

Digital with a convertibility option: Redemption can be made in gold anytime. Also available for exchange trading. Credible: The instrument is backed by one of the country’s biggest financial institutions. Inflation-ready portfolio tool: A commodity-backed financial asset will help you beat inflation at a good rate. A good financial inclusion tool: Regardless of your profile, you can readily access it. No large investment needed: You can invest in small denominations.

EGR allows every investor, whether a seasoned trader, a first-time college student, or a homemaker planning her family's future, to buy gold digitally on the exchange. Each EGR unit is backed by real, certified, physical gold stored in SEBI-regulated vaults.

Plus, as the most compelling aspect, unlike any other digital gold product, EGR holders can redeem their receipts and take actual physical delivery of gold whenever they choose.

Manoj Jain, Head Commodity Research, Prithvi Finmart, added that NSE's EGR is one of the best options for making an investment in gold, not only for HNI but also for small investors.

Adding, Jain mentioned that EGR starts with a small denomination of as low as 1gm to 1kg and with the standard purity option of 995 and 999.

Further, highlighting the most crucial aspect, he noted that, as opposed to gold ETFs or paper gold, EGRs offer the option to opt for physical gold against EGR. Also, while electronic gold is not regulated, it comes within the ambit of SEBI.

In case of taxation, if investors are holding for more than 24 months in a demat account, then 12.5% tax will be charged, and for a lesser period, as per the taxation slab, tax will be charged, he pointed out.

Thus, in conclusion, EGR is the most regulated and transparent form of investment for gold investors.