May 30, 2023
B Durga Prasad

Investing in Digital Gold: Unlocking Opportunities for Indian Investors

In recent years, digital gold has emerged as a popular investment avenue among Indian investors. With the recent announcement of no capital gains taxation on the conversion of gold to electronic gold receipts (EGRs), this form of investment has gained even more attention.

Investing in Digital Gold

Indians have long had a deep affinity for gold, considering it a symbol of wealth and prosperity. With the integration of technology into our lives, digital gold has become an appealing investment option. It serves as a hedge against uncertainty and offers high liquidity, allowing investors to convert it into cash instantaneously. Digital gold, in the form of electronic gold receipts (EGRs), provides a secure and convenient way to invest in this precious metal.

What are EGRs?

EGRs are depository gold receipts that can be traded on stock exchanges, much like shares. They serve as a substitute for physical gold, which is stored in vaults. Investors can hold EGRs in a Demat account opened with a SEBI-registered broker. This account allows them to buy or sell EGRs on stock exchanges, providing a seamless investment experience.

How to Invest in EGRs?

To invest in EGRs, individuals need to open a Demat account with a SEBI-registered broker. Once the account is set up, investors can buy or sell EGRs through the stock exchange, just like trading stocks. Additionally, if investors wish to convert their physical gold to digital form, they can do so by depositing their gold at a designated delivery centre. A depository receipt is then created, enabling the trading of gold on the exchange.

Tax Implications of EGRs:

Currently, the tax rates on profits gained from buying and selling EGRs are still ambiguous and require further clarification from the government authorities. One perspective suggests that profits held for more than a year may be subject to a 10% tax rate on gains exceeding one lakh, while profits held for less than a year could be taxed at a rate of 15%. Another perspective considers a tax rate of 20% with the benefit of indexation for EGRs held for more than 36 months. For shorter holding periods, taxes would apply at the individual's applicable tax slab rate.

The Significance of the Recent Capital Gains Announcement:

In the Budget 2023, the finance minister proposed a significant development for digital gold investment. Investors converting their physical gold to EGRs will no longer be liable to pay capital gains tax. This amendment brings clarity and removes ambiguity surrounding the potential tax implications of converting physical gold to digital form. It also simplifies the calculation of capital gains, including the period of holding, and provides the real benefit of indexation to investors.


Digital gold, particularly in the form of EGRs, presents a lucrative investment opportunity with minimal risk for Indian investors. It offers the advantages of holding physical gold without the concerns related to storage security and quality verification. With the SEBI's regulatory framework and the government's recent amendments, the landscape of investing in gold is rapidly changing. Digital gold can now add shine to investment portfolios, providing investors with new avenues for diversification and growth.


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