Digital gold has emerged as one of India's fastest-growing investment trends, with ₹3,171.96 crore in transactions recorded on UPI in March 2026 alone. According to reports from 1 Finance, this online investment product allows investors to purchase small quantities of gold starting from as little as ₹1 without physically owning it. When purchased through apps, the platform's custodian buys equivalent physical gold and stores it in insured vaults, providing digital certificates of ownership that can be sold back at live market prices or redeemed as physical gold coins, bars, or jewelry.
The digital gold buying process involves six key steps: choosing a platform (such as PhonePe, Google Pay, Paytm, or specialized platforms like MMTC-PAMP and Tickertape), completing KYC with PAN card verification, checking live gold prices that include 3% GST, entering investment amounts starting from ₹1, and paying via UPI, debit card, or net banking for instant account crediting. As reported by 1 Finance, the cost structure includes immediate 3% GST deduction, a hidden markup of 2-3%, and a buy-sell spread that can result in a 9% loss on day one, even though the investment was ₹1,000. Storage fees apply after free periods end, typically lasting 5-7 years.
On November 8, 2025, the Securities and Exchange Board of India (SEBI) issued a warning stating it does not regulate digital gold, with similar regulatory gaps from the Reserve Bank of India. According to 1 Finance, this complete lack of regulatory oversight means no investor protection if platforms fail, no standard storage rules, no compulsory third-party audits, and no proper complaint handling systems. The article notes that conversion to physical gold involves making charges, delivery fees, and minimum weight thresholds of 0.5-1 gram for redemption.
SEBI-regulated alternatives offer superior investment protection and transparency. Gold ETFs provide regulated exposure with annual expense ratios of 0.5% to 1% compared to digital gold's 6% or more hidden costs. Popular options include Nippon India ETF Gold BeES, HDFC Gold ETF, SBI Gold ETF, and ICICI Prudential Gold ETF, though they require demat accounts. Gold mutual funds invest in gold ETFs and offer SIP-friendly options starting from ₹500 monthly without demat requirements, with well-known funds like HDFC Gold Fund, SBI Gold Fund, and Kotak Gold Fund providing professional management and SEBI regulation. Gold funds offer additional advantages including liquidity, transparency through NAVs, and professional management without physical storage concerns.
For modern investors seeking 24/7 gold exposure with full on-chain transparency, tokenised gold represents a compelling alternative to traditional digital gold platforms. As reported by 1 Finance, XAUt on Mudrex combines the oldest store of value with the most efficient financial infrastructure available today. The platform allows fractional ownership down to 0.000001 troy ounces, with investments starting as low as ₹100. Unlike traditional digital gold, XAUt provides 24/7 trading, no storage fees, full transparency with verifiable on-chain claims to specific physical gold bars stored in Swiss vaults, and no Demat account requirements. However, it's important to note that purchasing crypto tokens, including tokenised gold assets, is legal in India with gains subject to 30% flat tax and 1% TDS as per Indian crypto tax rules.
