India is the largest importer of gold globally, which doesn’t come as a surprise as gold is offered as God’s currency at temples, passed down through generations, and unwaveringly trusted as an investment instrument across different segments in India. While the belief in gold as a stable and resilient investment remains intact, the nation is fast changing the way they invest in gold.
It could be the fear of stepping out during the pandemic, the safety and cost concerns surrounding the procurement and storage of physical gold, or simply going through the ordeal of the cumbersome process that has prompted numerous investors to shift their focus to investing in digital gold. Whether you’re new to the idea or have been toying with it for a while, we’ve attempted to provide some frequently sought information that will help you better understand the concept of investing in digital gold.
What is Digital Gold?
Simply put, digital gold is a promise of the equivalent value of physical gold that you can purchase digitally. These are stored in safe vaults, and the buyer also has the option to get the actual physical gold delivered to them. For instance, when you buy digital gold online through a trusted partner, MMTC-PAMP stores the equivalent amount of gold for you in their secure and insured vaults – much more secure than storing it ‘in the cloud’.
Where can one buy digital gold?
All major trusted e-wallets, such as Paytm, Google Pay, and PhonePe, allow you to buy digital gold on their platform. Additionally, financial institutions and brokers, such as Aditya Birla Capital, HDFC Securities, Fisdom, and Motilal Oswal, also provide their customers with the option of digital gold investment.
What are the minimum and maximum amounts one can invest?
Depending on the platform you’re buying it on, you can start as low as Re. 1 and go up to Rs. 2 lakhs in single transaction every day. You can also carry out multiple transactions in a day till the time the cumulative amount is below Rs 2 lakhs.
What is the purity and authenticity of the gold?
When you invest in MMTC-PAMP digital gold, your investment is backed by 24Karat, 999.9 purity grade authentic gold.
Where is the digital gold stored?
At no point does the ownership of your accumulated Gold transfers to either Partner Platform or MMTC-PAMP. MMTC-PAMP is the custodian of your accumulated Gold, right from the point you buy Gold in GAP on the partner platform. We secure your gold in physical form until you redeem the gold or sell back the gold to us. The vault is fully insured for all eventualities.
MMTC-PAMP has also appointed ‘IDBI Trusteeship Services Limited’ (unit of IDBI Bank) as security trustee for the gold bought by the customers. The trustee ensures the quality of the gold and that the gold sold to investors is segregated and available in the vaults.
When can one get the physical gold in hand?
Digital gold investments work in two ways. You can either transact straight from your vault, which means you can buy and sell gold directly on the choice of platform. Or you can get physical gold worth the amount invested in digital gold delivered to you as well. Since MMTC-PAMP allocates physical gold to your name once the digital gold is purchased, we can also directly deliver that gold to you once you raise a redemption request.
Is GST levied on digital gold?
Yes, a 3% GST is levied on your purchase of digital gold. Also, keep in mind that the profit earned on digital gold is taxable in the same manner as returns on investment in physical gold.
Digital gold investment may still be in the nascent stages in the country and you truly stand a chance to start building your digital gold portfolio with the click of a button. Here’s hoping that you now have some insights into the commonly asked questions surrounding digital gold investments and are in a better place to take a calculated decision.