While making investments, investors are mainly concerned about the taxes levied on the investment option that they have chosen. Speaking of investments, gold has always been one of the topmost choices for investors. And since digital gold is becoming a popular way of investing in gold, you may wonder if digital gold is taxed or not. In this article, we will know everything that you need to know about the tax on digital gold to help you make informed decisions about your gold investments. 

What is Digital Gold?

Digital gold is nothing but 24 Karat pure gold which is bought and sold online instead of physical stores. This gold is stored in well-protected physical vaults which are located away from the proximity of thieves. Digital gold has revolutionized the way of investing in precious metals like gold. It has emerged as a very efficient and safe way of buying gold while skipping the added hassle. Customers can simply buy, sell and manage their gold investments remotely on the mobile applications of the digital gold provider and get the digital gold delivered as physical gold right at their doorstep. 

Where Can You Buy Digital Gold?

There are several platforms where you can buy digital gold these days. Some of the best platforms are given below. 

MMTC Pamp

MMTC Pamp is one of the leading platforms where customers can buy, sell, and manage digital gold. They are well known around the world for bringing the global gold standard to India. 

Augmont Gold

Augmont Gold is a platform that offers various other products and services related to gold besides digital gold like gold loans, gold SIPs, and so on. 

OroPocket

OroPocket has just recently emerged as a platform to buy digital gold. Here, you can start investing in gold for an amount as low as Rs. 1. In addition to this, you can set up a gold auto-investment plan and accumulate large amounts of gold over a long period of time. 

SafeGold

SafeGold is a great place to buy, sell and manage your 24 Karat digital gold and ensure its safety in free storage vaults. 

PayTM

PayTM, in addition to being one of the most preferred platforms for making payments online, offers its users to buy digital gold on the application. Here, the live price of gold is active for 7 minutes. The customers have to complete the transaction within that time. 

Benefits of Buying Digital Gold

There are uncountable benefits of buying digital gold from any of the platforms mentioned above. Some of them are given below.

No Risks of Thefts

Since you do not buy physical gold and store it in your home, there are no risks attached to the storage of your gold assets. The platform from which you buy digital gold guarantees full protection of your gold assets in physical vaults. 

No Additional Costs for Storage

In the case of physical gold, most people have to buy bank lockers. Then they have to pay an annual fee for maintenance of your locker. In addition to this, the banks do not guarantee the safety of your assets even after charging a fee for the locker. 

Hassle Free Buying and Selling

Unlike physical gold that has to be bought via physical stores, you can buy digital gold from the comfort of your home. With platforms like OroPocket, you can start buying digital gold in just five minutes. 

Investment as Low as Rs. 1

You can buy digital gold with as much money as you have. There are many platforms that let you start investing in gold for a minimum amount of Rs. 1 to Rs. 100. 

Safe Investment Option

In addition to providing safety, cutting down storage costs, and being an easy investment option, digital gold is a safe investment option. It helps you to diversify your portfolio as well as provide a hedge against rising interest rates, inflation rates, and ongoing geopolitical tensions around the world. 

Is Physical Gold Taxed?

Yes, physical gold is taxed at different rates depending on the duration of holding the gold investments. There are two ways in which physical gold taxes can be categorized, that is, short-term and long-term. The short-term gains are counted when the gold has been held for less than three years. In the case of short-term capital gains, the taxes are calculated after adding the capital gains from gold investments to the annual income of the holder. You can then evaluate the category of the slab under which the total income falls. 

On the other hand, if you are holding physical gold in the form of jewelry, biscuits., gold schemes, etc., for more than three years, it will fall under long-term capital gains. In this case, the capital gains are taxed at the rate of 20% and 4% cess. Sometimes, you may have to pay a surcharge as well. 

While buying physical gold, a 3% GST in addition to the making charges of the gold item is applied to the selling price of the item. Also, 1% TDS (Tax Deduction at Source) is applied if you are buying physical gold worth 2 Lakhs or more in cash. 

Is There Any Tax on Digital Gold?

Yes, there is a tax on digital gold. It is equivalent to the taxes incurred on physical gold in case of long-term capital gains, that is when the gold is held for more than 3 years. There will be a 20% tax and a 4% cess on long-capital gains for gold. On the other hand, there is no direct tax applicable on the short-term capital gains in the case of digital gold. 

Conclusion

When making gold investments, it is important to consider the taxes applicable to your gold investments. Based on that, you can map out timelines for the encashment of your gold assets. Also, consider the tax slabs that apply to your annual income to find out the possible tax amounts that you may have to pay for gold assets. Considering the tax applicable on the physical gold and digital gold investments, the latter option seems to be the better way to go.