Both digital gold and gold ETFs are relevant tools for today’s investors. Digital gold offers instant access, ease of use, and convertibility into tangible assets. Gold ETFs provide regulated backing and integration into broader financial planning.
Gold has always held a prominent place in Indian portfolios, but how people invest in it is changing. What once involved large sums, safety concerns, and lengthy deliberation can now happen in seconds, through mobile apps that offer convenience and flexibility.
This shift is led by a generation comfortable making financial decisions on the go. They explore options digitally, compare products instantly, and expect investments to move at the pace of their lives. Gold remains important, but expectations have evolved in terms of simplicity, speed, and flexibility are now essential.
Two formats have gained momentum: Digital gold and gold ETFs (Exchange-traded funds). Both remove traditional barriers like storage hassles and authenticity concerns, yet each functions differently. Understanding which fits your financial habits and goals is key.
Ownership and accessibility
Digital gold is probably the easiest entry point. Investors can start with as little as ₹10, and it’s backed by physical 24K gold stored in certified, insured vaults. No demat account is needed, and some platforms even allow delivery as coins or jewellery.
Gold ETFs, listed on stock exchanges, require a demat and trading account. For those familiar with stocks or mutual funds, ETFs fit seamlessly; newcomers may find the setup a bit more complex. Digital gold suits first-time or systematic investors, while ETFs are better for those already active in financial markets.
Cost structure and fees
Digital gold incurs a 3 per cent GST on each purchase. Gold ETFs may be exempt from GST but include brokerage fees and an annual expense ratio of 0.5–1 per cent. While digital gold can seem costlier upfront, ETFs may end up being more expensive over time.
Liquidity and Flexibility
Digital gold offers round-the-clock buying and selling. Some platforms allow conversion into coins or jewellery, combining utility with sentiment. Trading of gold ETFs is limited to market hours. While they offer excellent liquidity within that window, they do not provide the option to convert holdings into physical gold.
Investors seeking instant access and physical convertibility may prefer digital gold.
Regulation and security
Gold ETFs are regulated by SEBI, ensuring high transparency, reporting standards, and investor protection. Digital gold operates in a relatively less formal regulatory space, but leading platforms follow strong governance practices.
Taxation and potential returns
Digital gold held for 24 months or more is taxed as long-term capital gains (LTCG) and digital gold held lesser than this period are taxed as short-term capital gains (STCG). LTCG on digital gold attracts 12.5 per cent of tax with applicable cess. In the case of STCG, the tax is charged as per your income slab.
Gold ETFs held for more than 12 months are taxed at 12.5 per cent without indexation. If sold within 12 months, gains will be taxed at the investor’s applicable income tax slab rates.
One goal, multiple paths – Choose wisely
Both digital gold and gold ETFs are relevant tools for today’s investors. Digital gold offers instant access, ease of use, and convertibility into tangible assets. Gold ETFs provide regulated backing and integration into broader financial planning.
Gold as an investment will continue to evolve, and so should the approach to it. Choosing the format that aligns with your priorities and habits ensures that your gold investments are purposeful, flexible, and aligned with your financial goals.
(The author is Director, Augmont)
Published on September 21, 2025