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.
