Digital Gold

Advantages and Disadvantages of Digital Gold

3 Mins read
Young man checking his phone for using digital gold

As of today, in the year 2021, people are getting more familiar with investing their money in various platforms like Stock market, Properties, and Gold. Earlier, people of India were more familiar with FDs (Fixed Deposits) as a form of trusted investment, but due to increasing inflation, everyone are finding newer and more rewarding investment options other than Fixed Deposit.

Gold is a preferred investment by investors when it comes to inflation hedge. Gold is known to also perform well during stock market crash. With the new technology, gold investment has also simplified and a technological version of gold is available, called as Digital gold. In this article we have listed down the advantages and disadvantages of digital gold.

Advantages of Buying Digital Gold

  • Availability:- Digital gold can be bought from any app over the internet. You can buy Digital Gold at the current price of gold and sell it whenever the prices are greater.
  • No Minimum Amount:- You can also choose to make an investment from as low as of ₹1, and the maximum amount depends on the application. So, it is very easy to buy digital gold.
  • Cost Saving and more flexible:- Through digital gold you can enjoy the profits of physical gold without buying physical gold. The digital gold can be converted into physical gold, an option that GoldLane gives to the investors. You can get the physical gold delivered to your doorstep. It is very easy to convert digital gold into physical gold.
  • Highly liquid:- Digital gold is highly liquid, it can be converted into cash within few clicks and whenever you want (no questions asked).
  • Stable and Same price that is uniformity:- In digital gold the gold price is same for all states throughout the country; unlike the price of physical gold
  • Storage facility, reducing costs:- With digital gold you don’t have to worry at all about storage problems and costs. The sellers stores your gold at a secure facility. At GoldLane you don’t have to pay extra storage charges.
  • Mobile application available:- The ease of buying digital gold can be bought from the mobile application very easily. You can invest in Digital Gold with GoldLane through our mobile app.

Disadvantages of Buying Digital Gold

  • GST:- 3% GST is applicable while buying gold, levied by Govt. This is because when you own Digital gold you actually own physical gold which is stored safely for you by the Digital gold seller.
  • Costs incurred:- While buying Digital Gold even though the cost is comparatively less than what you would pay for physical gold, however an Extra spread cost (which includes handling charges, transaction charges, storage charges) has to be paid while buying gold which is around 2-3%. These both charges are applicable only while buying and not while selling gold and % depends upon the seller you choose. Transaction charges are applicable for any kind of investment you make. At GoldLane you only pay 2%.
  • Bonds:- Most companies also make their investors sign agreements or bonds of a certain time period. After the predetermined time period, the investor has to mandatorily sell digital gold at least or convert the online gold into physical gold. If not, the company holds the option to deactivate the account resulting in a sabotage of the gold investment held under the same. Note: At GoldLane you can store your gold for free of cost for 5 years and 0.5% storage cost is applicable after 5 years.

There two types of taxes that have to be paid:

Short term capital gain
For example, if online gold is sold before three years, then it will be considered as short-term capital gain. Which will be taxed according to the current income tax slab.

Long term capital gain
If digital gold is sold after three years, then it will be considered as long-term capital gain. On that you have to pay 20% tax plus 4% CESS with indexation

Indexation saves the investment amount’s profit from the high tax payment and takes care of your profit. It means earlier when the gold prices are less and that time if you bought gold the income becomes huge. Which means you have to pay huge amount of money. But indexation says at that time, the inflation rate was also less, and now the inflation rate is also high. Hence, it saves money from high taxes.


In India all investments are taxed and you will have to pay extra charges while investing in any instrument. These extra charges include brokerage charges, service tax etc. Good investment is that which surpasses all the extra charges and gives you hefty returns. Gold is one such Investment. Choose the investment type where the advantages outweigh the disadvantages. The disadvantages of digital gold are far less than the advantages and thus proves to be an amazing choice.

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