Short answer: For small, flexible, beginner-friendly buying, digital gold is the easiest, though it carries a 3 percent GST and a buy-sell spread. For cost-efficient, liquid, long-term investing, gold ETFs are usually the best choice, with no purchase GST and low fees, if you have a demat account. Sovereign Gold Bonds were historically the most tax-efficient option, but new bonds are no longer being issued, so they are now available only on the secondary market.
If you want gold without the locker, you have three main “paper gold” routes. Here is how they compare.
The three ways to buy gold online
- Digital gold: buy 24-karat physical gold online in tiny fractions (from as little as 1 rupee), stored in an insured vault by the provider. Sell back anytime or take physical delivery.
- Gold ETFs (Exchange Traded Funds): SEBI-regulated units that track the gold price, held in a demat account and traded on the stock exchange during market hours.
- Sovereign Gold Bonds (SGBs): government securities issued by the RBI, denominated in grams of gold, that also pay a fixed 2.5 percent annual interest.
Side-by-side comparison
| Feature | Digital Gold | Gold ETF | Sovereign Gold Bond |
|---|---|---|---|
| Regulator | Not directly SEBI/RBI regulated | SEBI | RBI (government-backed) |
| GST on purchase | 3 percent | None | None |
| Ongoing cost | Spread, possible storage fee | Low expense ratio (~0.5 to 0.9 percent) | None |
| Extra income | None | None | 2.5 percent annual interest |
| Demat account needed | No | Yes | Not for holding, but exchange access helps |
| Minimum investment | Very small (from 1 rupee) | Around 1 unit (a few hundred rupees) | 1 gram |
| Liquidity | Sell back anytime | High, during market hours | Limited; secondary market only now |
| Availability | Widely available | Widely available | New issuances stopped; secondary market only |
Digital gold: best for small, flexible buying
Digital gold’s strength is accessibility. You can start with tiny amounts, no demat account is needed, and you can buy, sell, or take delivery from an app in seconds. That makes it ideal for beginners and for building a gold habit gradually, a little at a time.
The costs are the trade-off. A one-time 3 percent GST applies on every purchase, there is a buy-sell spread, and some providers add a storage fee after a period. You are effectively a few percent behind the moment you buy, so digital gold suits accumulation and convenience more than large, cost-sensitive investing. It is also not directly regulated the way ETFs and bonds are, so choosing a reputable provider matters.
Gold ETFs: best for cost-efficient, liquid investing
Gold ETFs are the clean middle ground. They are SEBI-regulated, carry no GST on purchase, and have low annual expense ratios, which makes them meaningfully cheaper than digital gold for larger or longer-term investments. They trade on the exchange, so they are highly liquid during market hours, and they suit systematic investing.
The catch is that you need a demat and trading account, which adds a small setup step. Gold ETF gains are taxed as capital gains based on your holding period, and these rules have changed in recent budgets, so confirm the current treatment before you invest. (If you prefer not to open a demat account, a gold mutual fund or gold fund-of-funds offers similar exposure through a regular mutual fund platform.)
Sovereign Gold Bonds: the tax-efficient option that is now hard to get
SGBs were long considered the most rewarding way to hold gold, and for good reason. They are government-backed, carry no GST and no storage cost, and pay 2.5 percent annual interest on top of gold-linked returns. Best of all, for original subscribers who held to the 8-year maturity, the capital gains at redemption were fully tax-free.
There are two important catches in 2026:
- New SGB tranches are no longer being issued. You can now only buy existing bonds on the secondary market through the stock exchange, where liquidity can be thin and pricing uneven.
- The maturity tax exemption is most valuable to original subscribers. Investors who buy on the secondary market may be taxed on their gains, so the standout tax advantage does not fully carry over.
SGBs remain attractive for long-term holders who already own them or who buy secondary-market bonds with these limitations in mind.
So which should you choose?
- Beginner, or want to buy small and often? Digital gold, for its convenience and tiny minimums.
- Investing a larger amount for the long term, and comfortable with a demat account? Gold ETFs, for lower costs and liquidity.
- Long-term holder who already owns SGBs, or willing to navigate the secondary market? SGBs, for the interest income and government backing.
A common approach is to use digital gold to start and accumulate, then move toward ETFs as your investment grows and cost efficiency matters more. Whatever you choose, gold works best as a portion of a diversified portfolio, not the whole of it.
Frequently asked questions
What is the best way to buy gold in India?
It depends on your goal. Digital gold is best for small, flexible buying; gold ETFs for cost-efficient, liquid long-term investing; and Sovereign Gold Bonds for long-term holders, though new SGBs are no longer being issued.
Is digital gold or a gold ETF cheaper?
Gold ETFs are usually cheaper for larger or longer-term investments, because there is no purchase GST and expense ratios are low. Digital gold carries a 3 percent GST and a buy-sell spread.
Can I still buy Sovereign Gold Bonds in 2026?
Not as new issuances. New SGB tranches have stopped, so you can only buy existing bonds on the secondary market through the stock exchange.
Do I need a demat account to buy gold online?
For gold ETFs, yes. Digital gold does not require a demat account, which is part of why it is popular with beginners.
Which gold option is most tax-efficient?
Historically, SGBs held to maturity by original subscribers, thanks to the tax-free maturity gains. With new issuances stopped, evaluate the current tax treatment of each option before deciding.
Start your gold journey the easy way
If you are just getting started with gold, digital gold removes every barrier: no demat account, no large minimum, just a few taps. With Jupiter, you can buy and sell Digital Gold in small amounts right from the app and build your holding gram by gram. Jupiter is the 1-app for everything money, so your gold sits alongside your savings and investments in one place.
*Digital gold is not currently regulated by SEBI or the RBI. Prices, spreads, fees, GST, and tax rules vary and are subject to change, and gold investment taxation has been revised in recent budgets. This article is general information, not investment advice. Consult a SEBI-registered adviser for guidance specific to your situation.*
