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Digital gold purchases surged in 2026, but the product remains outside SEBI’s regulatory framework.
A 3% GST and buy-sell spreads can reduce returns, especially for short-term buyers.
Gold ETFs offer regulated gold exposure and may suit long-term portfolio investors better.
Digital gold has become one of the easiest ways to buy gold in India. A mobile phone and a small amount of money can give access to 24K gold through payment apps and fintech platforms. The rise has been sharp. In January 2026, digital-gold purchases through UPI reached Rs. 3,926 crore across 219 million transactions. More than 90% of such purchases came through UPI. The wider digital-gold market now stands at an estimated Rs. 7,000 crore.
This growth shows a clear change in how retail buyers access gold. Physical coins and jewellery no longer hold the only appeal. Digital gold offers small purchases, simple storage and easy sale through an app. Yet convenience does not mean that digital gold carries the same safeguards as a regulated investment product.
The key point for buyers in 2026 is the regulatory status of digital gold. In November 2025, SEBI warned the public that digital gold and e-gold products offered through online platforms do not fall under its regulatory framework. Such products also do not receive the investor-protection measures that apply to securities under SEBI. The regulator also flagged counterparty and operational risks.
This does not mean that every digital-gold provider poses a problem. It means that buyers need to study the company behind the app, the gold custodian, the vault system and the terms of sale. A familiar payment app alone should not decide the purchase.
India may consider a dedicated framework for digital gold in 2027, after consultations with industry and government stakeholders. That plan remains a future possibility, not a confirmed regulatory system.
The price of gold adds another layer of risk. Gold reached about $5,595 per ounce in January 2026. It later fell below $4,000 in June before a recovery toward $4,400 in August. On August 19, spot gold stood near $4,338 per ounce.
Indian prices also remain high. On August 19, 24K gold traded at about Rs. 1,54,970 per 10 grams.
These figures show that gold can face sharp price swings even when investors view it as a safe-haven asset. Gold still has strong support from central banks, yet that support does not remove short-term price risk. Central banks bought 289 tonnes of gold in the second quarter of 2026, while 45% of central banks surveyed by the World Gold Council said they planned to raise their gold holdings over the next year.
Also Read - Gold Reserves vs US Treasuries: Why Central Banks Are Rebalancing
Digital gold also has a direct tax cost at purchase. Buyers generally pay 3% GST on digital gold. A Rs. 1 lakh purchase therefore costs about Rs. 1.03 lakh including GST, before other charges.
The buy-sell spread adds another cost. Industry estimates place the spread for digital gold at about 2.5% to 5%, although the exact figure can vary by provider and market conditions.
This structure makes digital gold less attractive for short-term trades. Gold must rise enough to cover GST, the spread and the eventual tax on profits before the buyer sees a meaningful return.
The tax treatment depends on the holding period. A sale within 24 months generally creates a short-term capital gain, which falls under the investor's applicable income-tax slab. A holding period above 24 months qualifies for long-term capital gains tax at 12.5%, without indexation.
This creates an important difference from Gold ETFs. Current rules allow a Gold ETF to qualify for long-term capital gains after 12 months, with a 12.5% rate.
Gold ETFs have also seen a major rise in demand during 2026. Indian Gold ETF demand reached 24 tonnes in the first half of the year, a 163% rise from the same period a year earlier. Gold ETF assets under management reached Rs. 1.7 trillion, or about $17.6 billion, by the end of the second quarter. Holdings reached 119 tonnes.
The difference matters. Gold ETFs operate under the SEBI framework, while digital gold does not. Gold ETFs also avoid the 3% GST charged on the purchase of digital gold. A demat account is necessary for an ETF, while digital gold does not require one. Digital gold has an advantage for buyers who want very small purchases or simple physical redemption.
The provider deserves close attention before any digital-gold purchase. The gold custodian, vault operator, audit process and ownership structure all matter. Terms for physical redemption also require careful review. Minimum quantities, delivery charges, minting fees and other costs can affect the final value.
The role of the app also needs clarity. Major back-end providers include MMTC-PAMP, Augmont and SafeGold, while several apps and payment platforms act as front-end distributors.
Also Read - How Central Bank Gold Buying is Supporting the Gold Price Rally?
Digital gold has won on convenience, but regulation remains its biggest weakness. Record UPI purchases show strong consumer demand, while the rapid rise in Gold ETF assets shows that investors also want regulated gold exposure.
At gold prices near Rs. 1.55 lakh per 10 grams, the choice of investment format matters more than ever. Digital gold can suit small, occasional purchases where convenience matters most. For long-term portfolio exposure, Gold ETFs deserve a close comparison. The right decision should depend not only on the gold price, but also on taxes, spreads, regulation, custody and the total cost of ownership.
1. Is digital gold regulated by SEBI?
No, digital gold does not fall under SEBI’s regulatory framework or its investor-protection measures.
2. What GST applies to digital gold?
Digital gold generally attracts 3% GST at the time of purchase.
3. How is digital gold taxed?
Gains within 24 months generally face the applicable income-tax slab rate, while gains after 24 months face 12.5% LTCG tax without indexation.
4. Is digital gold better than a Gold ETF?
It depends on the goal. Digital gold offers convenience and small purchases, while Gold ETFs provide regulated market exposure.
5. What should buyers check before purchasing digital gold?
Check the custodian, vault arrangements, audit process, buy-sell spread, redemption terms, delivery charges and total costs.
