Investment in gold is recognized as secure haven investment as it acts as a diversifier and mitigates losses in occasions of market place pressure. Apart from delivering liquidity with no credit danger, gold also improves all round portfolio efficiency by producing lengthy-term returns.
However, holding physical gold comes with storage price due to danger of theft, burglary and so on. To preserve physical gold secure, 1 has to employ a locker and/or take insurance coverage cover. Apart from locker rent, banks also place investments in Fixed Deposit (FD) as a situation of allotting a locker, which also adds to the price of holding physical gold.
Due to the danger and price of holding physical gold, investments in digital golds are gaining reputation.
“Investing in digital gold is basically buying gold in dematerialised form or in mobile e-wallet. Currently, Augmont Gold Ltd., MMTC-PAMP India Pvt. Ltd. and Digital Gold India Pvt. Ltd. are offering digital gold through various fintech and brokerage companies like PayTM, Amazon Pay, Google Pay, PhonePe, HDFC Securities, Motilal Oswal, etc,” mentioned Insights by Gopal Bohra, Partner, NA Shah Associates.
“Investment in digital gold comes with various benefits such saving in storage cost and making charges, quality assurance, redemption/liquidation as per convenience, flexible investment either in any desired minimum value or quantity, etc,” he added.
Like physical gold, digital gold also attracts capital acquire tax at the time of redemption of the investment.
“As such there is no tax implication on investment in digital gold. However, if the investment in digital gold in aggregate in a year exceeds Rs 50 lakh, the seller will collect TCS @ 0.1 per cent on the amount exceeding Rs 50 lakh. Long term capital gain tax will be levied if digital gold is redeemed or liquidated after 36 months from acquisition and in other cases short term capital gain tax will be levied,” mentioned Bohra.
Apart from digital gold and gold ETF, investment in Sovereign Gold Bond (SGB) is also becoming a preferred way of investing in gold.
“Those who are looking for long term investment in gold, prefer Sovereign Gold Bonds because these bonds pay interest @ 2.50 per cent per annum apart from appreciation in gold price. However, during the lockdown period digital gold business has seen significant increase,” mentioned Bohra.