What is Digital Gold? Meaning, Benefits & How It Works

Summary:

• Digital gold means buying 24K (99.9% purity) gold online.  

• Such investments are backed by corresponding quantities of physical gold stored in insured vaults. 

• Digital gold avoids storage risk, locker costs, and making charges. 

• You can buy digital gold in “fractional quantities”. 

• You must pay 3% GST at the time of purchase. 

Studies show that in August 2025, digital gold purchases surged 377% and reached 99.77 million transactions compared to just 20.92 million in April 2024 (via UPI). (Source: Economic Times). 

Isn’t this a highly impressive growth in just 16 months? 

Yes, Indian investors have now found a new way to invest in the yellow metal. 

But what exactly is digital gold? 

In this article, understand what digital gold is, how it works, its advantages, and the latest digital gold taxation rules you must know before investing. 

What is Digital Gold? 

Digital gold means buying “24K gold online” instead of purchasing physical gold (say in the form of coins or jewellery). In this investment route, you do not receive the gold in hand at the time of purchase.  

Instead, after you make the payment, the service provider (the company from which you purchase digital gold) buys an equal amount of physical gold, usually with purity levels of 99.9%. This gold is then stored in a third-party vault and is insured against risks.

Digital Gold vs Physical Gold: How Do They Differ? 

Physical gold refers to “tangible gold” such as jewellery, coins, or bars that you can hold and store yourself. It is the traditional method of owning gold. In contrast, digital gold is held in “electronic form” and is stored in insured vaults. You do not hold the metal yourself but remain the owner.  

Note that both investment routes provide exposure to gold prices but differ in terms of form, liquidity, and costs. For more clarity, let’s understand the difference between digital gold vs physical gold in detail: 

How Does Investing in Digital Gold Work? 

Now that you have learned “what is digital gold”, let’s see how you can invest in it. Investments in digital gold can be made via several apps and online platforms. For example, you may consider airpay money, which has partnered with Augmont and allows users to invest in “DigiGold” directly through the airpay money mobile application.  

Want to learn how? 

It happens in these easy steps:

Step 1: Register on the Platform

Download the airpay money app and create an account. Complete the KYC process as required. 

Step 2: Select the Investment Amount

Choose how much digital gold you want to buy. You can: 

• Enter an amount in rupees or 

• Select the quantity in grams. 

Step 3: Review the Gold Price

The price shown on the platform is real-time and is linked to the domestic price of gold prevailing in the market. 

Step 4: Make the Payment 

Pay using UPI, net banking, or other available digital payment options within the app. 

Step 5: Gold Purchase and Storage 

Once payment is confirmed, an equivalent amount of physical gold is purchased and stored in an insured vault. 

Step 6: Track Your Investment 

Your digital gold balance is updated in your airpay money account. You can view your holdings and track their value from the dashboard. 

3 Major Advantages of Investing in Digital Gold in 2026 

One of the primary benefits of digital gold is “fractional ownership”. You do not need to purchase a full gram or a large quantity. Instead, you can: 

• Buy gold in fractions of a gram or 

• Invest an amount as low as ₹1 

This lowers the entry barrier and even allows gradual accumulation. Additionally, some more advantages you can realise are: 

1. Anytime Access and No Physical Handling 

Digital gold removes the need to visit a jewellery store or arrange physical storage. You can buy or sell gold through online platforms, like airpay money, using only your smartphone.  

There is no need to worry about: 

• Locker charges 

• Theft risk 

• Verifying purity at the time of resale 

Transactions are completed 100% digitally, and your gold holdings are recorded in your account. 

2. No Making Charges on Investment 

When buying gold jewellery, you pay making charges in addition to the gold value. These charges increase the total cost and are not recoverable during resale. In digital gold, such making charges do not apply at the time of purchase. Additional costs arise only if you later choose to convert your holdings into physical coins or bars. 

3. Transparent Market-Linked Pricing 

The airpay money platform displays the live gold price at the time of the transaction. The buy and sell rates are based on “wholesale spot market prices”. This allows customers to benefit from rates that are closer to bulk trading prices instead of retail jewellery rates.  

Such a pricing model is more transparent as compared to the arbitrary or discretionary rates usually set by local jewellers. 

What are the Latest Digital Gold Taxation Rules? 

Digital gold is taxed in the same way as physical gold or jewellery. The tax you pay depends on how long you hold the investment before selling it. Let’s check out the latest digital gold taxation rules:

Additionally, when you buy digital gold, 3% GST is charged on the purchase value. It is paid upfront at the time of buying.

Conclusion

So now you know what digital gold is, how it differs from physical gold, and the digital gold taxation rules. If we were to recap, it is 24K gold (with 99.9% purity) held electronically and backed by physical gold stored in insured vaults.

As an investor, you pay 3% GST upfront without any making charges. Both purchase and sale can be done online at prevailing market prices. Looking to buy digital gold?  

You may invest with airpay money in 2026. We are a 360-degree financial wellness platform trusted by 1,00,000+ users. Download the airpay money mobile application today and start investing with as low as ₹1.