Planning to purchase digital gold on Dhanteras? Here are some options

Purchasing gold during Dhanteras and Diwali is an age-old tradition for Indians. Physical gold in the form of jewellery, bars and coins sells like hot cakes during this period.

Most people, however, consider it a risk to visit the jewellery shop in times of COVID-19 pandemic. In such times, gold can be purchased through digital means as it is not only easy to buy but also easy to store.  When you buy gold online, prices are reduced by Rs 50 per gram for those who subscribe online and make the payment through digital mode.

For the uninitiated, 10gm of 24 carat gold is being priced at Rs 47,740 whereas 10gm of 22 carat gold sells for Rs 46,740 on November 2. Gold prices are driven by the rule of demand and supply and can fall as well. Purity of physical gold is .9999.

Now, gold can be brought through digital routes like Paytm, PhonePe and under the Gold Rush plan of Stock Holding Corporation of India. One can buy gold under these options in association with MMTC-PAMP or SafeGold or both.

MMTC-PAMP GOLD ACCUMULATION PLAN

If you want to buy gold without worrying about safe keeping of the metal, you can opt for the MMTC-PAMP’s gold accumulation plan. Under this plan, gold worth Rs 1,000 and in multiple thereof can be purchased.

There is also no obligation to make any fixed or periodic payments. Gold purchased under this plan is kept separately within the MMTC-PAMP vault with full insurance cover and security.

SAFEGOLD

Besides this, another safe option to buy, sell and take delivery of 24k physical gold via the online route is SafeGold. These transactions are carried out in low ticket sizes, around the clock, with the click of a button. In order to go for this buying route, one should open a metal account after completing the registration process.

This is a preferred option as it ensures complete freedom to ask for physical delivery of gold in the form of coins or bars and that the yellow metal can be purchased or withdrawn online 24 hours a day, 7 days a week and 365 days a year.

STOCK HOLDING CORPORATION OF INDIA'S GOLDRUSH PLAN

India’s leading securities provider Stock Holding Corporation of India operates the GAP under the name ‘GoldRush’. MMTC-PAMP provides back-office support and the entire metal availability including posting gold prices, its physical storage and delivery.

GOLD ETFs

You can also invest in Gold ETFs if you have a demat account just the way one buys and sells shares. Gold ETFs have high liquidity since they are listed on stock exchanges. These are considered as long term capital gain and taxed at 20 per cent post indexation if sold after three years. Gold ETFs are considered short term capital gains and taxed as per your income tax slab if sold before three years.

GOLD FUNDS

These funds invest in gold ETFs and are sold by mutual funds. NAVs are declared daily at the end of trading hours just like any other mutual fund scheme. These funds are best for those who want to invest in digital gold but do not have a demat account.

They are considered more expensive than investing in gold ETFs since the buyer has to bear the cost of the gold ETFs as well as the gold funds. Taxation remains similar to that of gold ETFs.

RBI’s SOVEREIGN GOLD BOND SCHEME (SGBs)

Those wanting their gold purchases with a sovereign backing will have to wait for some time as the next tranche of Sovereign Gold Bonds (SGBs) 2021-22 will be rolled out for five days from November 29-December 3. The last tranche was open from October 25-29.

SGBs are securities denominated in grams of gold, which are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. Though there is a sovereign guarantee, there is no physical backing of gold in SGBs.
The central bank decides the issue price of these bonds by factoring in the average closing price for the last three working days of the week preceding the subscription period. Price of 999 purity gold is considered to decide rates.

SGB offers an interest rate of 2.50 per cent per annum and at the time of maturity, the gold value at current market prices is returned along with the interest income. Under this scheme, one can buy maximum 4 kgs per annum and minimum 1 gram of gold through these bonds.

Prices are reduced by Rs 50 per gram those who subscribe online and make payment digitally. It can also be used as collateral for a loan and there is no tax on redemption of SGBs after 8 years. If one sells it before a period of 36 months, short term capital gain (STCG) tax is levied as per income tax slab. If sold after 36 months, profit is taxable as long term capital gains at 20 per cent post indexation.

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