SEBI Changes Rules, How To Buy Digital Gold In India?

SEBI, the stock market regulator in India, in its recent direction has asked stock brokers to stop selling digital gold and has sent a circular to the brokers to comply with the new guideline. The regulator has mentioned that there is no rule or regulation around digital gold in the exchanges. SEBI earlier identified digital gold trading as a breach of Securities Contracts (Regulation) Rules, 1957. Hence, it is certainly a trouble for the fintech platforms (like Groww, Upstoxx, Paytm Money) and traditional brokers that facilitate in purchasing of digital gold. Now they will be obliged to stall the activities by September 10, this year.

Digital Gold is a way of buying precious metal without the requirement to physically store the gold, by the investor. Although digital gold, from September, cannot be traded at the exchanges, the demand for the same will hover. So how can one investor buy digital gold in India now? There are online transaction platforms like Google Pay and PhonePe; those will continue operating in the digital gold market, like before.

How to buy digital gold from Google Pay

An investor, via Google Pay, can buy 24 carat gold units from MMTC-PAMP. MMTC-PAMP India is an advanced gold and silver refining and minting facility which is a joint venture between India's MMTC (a government of India undertaking) and Switzerland's PAMP SA (bullion brand). The physical gold will be stored in a Gold Accumulation Plan (GAP), with 100% insurance by MMTC-PAMP, for the custodian who bought digital gold from Google Pay.

To invest in digital gold, after opening Google Pay on phone, the investor should go to the 'Business and bills' segment where the Gold window can be found. Here the customer will be given the option to buy, sell and gift 99.9% pure gold securely. Here, as one is interested to buy gold, on the transaction bar the exact amount will have to be put in INR, which will be counted including GST. The GST on Google Pay is currently standing at 3% in Kolkata, but that will vary on the location. Then 'proceed to pay' and put UPI on the tab below. As the payment is done, the investor will receive the transaction ID, invoice number along with the exact quantity of gold bought.

To sell the already purchased gold, the investor should wait till the price of 24 carat gold goes up, to make profit. One should remember that digital gold is unlike Sovereign Gold Bond, where the GST is not needed to pay, thereby puts additional costs. So, while selling digital gold from the Google Pay account, the price should be higher than the buying price.

Google Pay Gold Locker

At the 'Gold Locker' which is a visual, digital representation of the Gold Accumulation Plan (GAP) account balance, one can check the details of gold purchased or received on the Google Pay account. All gold transactions can be viewed from here. Google Pay is a reliable option to invest in gold as it maintains the security of the customers exclusively. The 'Gold Locker' is linked to the verified SIM card and phone number; in any case of an unusual or suspected transaction, Google Pay will block access to the account automatically.

If an investor has no problem paying the GST on gold purchases, digital gold will be a viable option, without the tension of storage. Additionally, digital gold allows investing even precisely in a minimum amount of money (like Rs. 100) that will not be possible in other investment options like SGB or physical gold.