digital gold
Investing in gold has been an old tradition of Indians, but now the way of buying gold has changed with time. Earlier people used to buy physical gold i.e. jewelery or coins, but now people are rapidly moving towards digital gold. This is a modern and convenient method, in which there is neither tension of storage nor fear of theft. But before investing it is important to understand some important aspects of it.
Why is the popularity of digital gold increasing?
Digital gold is 24 carat i.e. 99.99% pure gold. There is no hassle of making charges or wastage and it is kept in safe, insured vaults. The biggest thing is that you can buy or sell gold in any amount anytime, 24 hours and 7 days. Be it Rs 1 or Rs 10 lakh, you can start with as much money as you can afford. If desired, later its physical delivery can also be taken in the form of coins or bars.
Hidden charges that go unnoticed
Most people think that only 3% GST has to be paid in digital gold, but apart from this there are many hidden expenses also. These include platform distribution fees, UPI or payment gateway charges, storage and custody fees, and delivery charges. This amount may seem small in the beginning, but in the long run it can increase the total cost of investment. Therefore, it is important to understand all these charges thoroughly before purchasing.
Is your gold safe?
The security of digital gold largely depends on the platform and its vault partner where you are investing. Some companies get their vaults audited by a third party and make the report public, while some do not. Therefore, before investing, check how transparent the platform is and what is its reliability.
Easy option for small investors
The most special thing about digital gold is that you do not need a huge amount to start investing in it. You can start with Rs 1 or even Rs 10 and gradually increase your gold savings by investing a little every month through SIP (Systematic Investment Plan). There is no need for a demat account, making it an easy option for beginning investors.
Stay informed about taxes and rules
Currently, there is no direct regulation by SEBI or RBI on digital gold. 3% GST has to be paid on every purchase. If you sell it within 3 years, the profit will be taxed as per your income tax slab. At the same time, if sold after 3 years, it will be considered as long term capital gain, on which 20% tax will be charged, along with indexation benefit will also be available.