Money Clarity

Digital gold vs gold ETF vs SGB in 2026

One of these three is no longer available. The government stopped issuing fresh Sovereign Gold Bonds after February 2024, which removed the only gold instrument that paid interest and matured tax-free. What remains is a choice between digital gold, which is unregulated but starts at Rs 10, and gold ETFs, which are SEBI-regulated but need a demat account.

The problem: most comparisons still rank an instrument you cannot buy

Search for how to buy gold in India and you will still find SGBs at the top of the table, usually described as the best option. They were. The scheme was discontinued for fresh issues because rising gold prices made the redemption and interest obligations too expensive for the government to carry.

Fresh issuance stopped after the 2023-24 Series IV in February 2024
Discontinuation for fresh issues was confirmed in the post-Budget briefing in February 2025
Existing bonds still trade on the secondary market, often at a premium, and still pay 2.5 percent interest
The tax-free redemption applies to original subscribers holding the full eight years - buying on the secondary market does not inherit it

How the two remaining options actually differ

Not on the gold. Both track the same metal. They differ on four things that decide which one is right for the amount you are investing.

Regulation: gold ETFs are SEBI-regulated securities; digital gold is neither a security nor a commodity derivative and sits outside both SEBI and the RBI
Entry cost: digital gold carries 3 percent GST that you never get back; ETF units carry no GST, only a small expense ratio and brokerage
Minimum: digital gold starts at Rs 10; an ETF needs a demat account and trades in whole units
Physical delivery: digital gold can be converted into coins, bars or jewellery; an ETF cannot

What the difference costs, on real amounts

The GST is the whole story at small amounts and stops mattering at large ones only in percentage terms, never in rupees.

Rs 5,000 in digital gold: Rs 150 of GST, gone on day one, plus the provider spread
Rs 5,000 in a gold ETF: no GST, brokerage of a few rupees, and an expense ratio of roughly 0.5 percent a year
Rs 1,00,000 in digital gold: Rs 3,000 of GST, which is six years of a typical ETF expense ratio paid up front
The crossover is not close - above roughly Rs 25,000 the regulated instrument wins on cost as well as on protection

How each one is taxed now

Tax treatment changed and most pages have not caught up. These are the current rules.

Gold ETF units bought after 1 April 2025: long-term capital gains at a flat 12.5 percent without indexation past 12 months
Gold funds: the same 12.5 percent, but past 24 months
Short-term gains on either: taxed at your income-tax slab rate
Digital gold: treated like physical gold, taxed as a capital asset on sale, with the 3 percent GST already paid on purchase and not creditable
SGB interest: taxable at your slab rate throughout, paid half-yearly

How to choose, in one line each

The decision is almost entirely determined by how much you are putting in and whether you will ever want the physical metal.

Saving Rs 50 to Rs 2,000 at a time, no demat account: digital gold, knowing it is unregulated
Investing more than about Rs 25,000, want regulation and lower cost: gold ETF
Saving toward jewellery or coins for a specific occasion: digital gold, because it converts
Already hold SGBs from an original subscription: hold to maturity, because the tax-free exit only survives that way
Carrying a credit card balance: neither, until that is cleared

Common questions

Are Sovereign Gold Bonds still available in 2026?

Not as fresh issues. The government stopped new SGB tranches after the 2023-24 Series IV in February 2024 and confirmed discontinuation in the post-Budget briefing of February 2025. Existing bonds can still be bought on the secondary market, but the tax-free redemption at maturity applies only to original subscribers holding the full eight years.

Is a gold ETF better than digital gold?

On cost and regulation, yes. Gold ETFs are SEBI-regulated, carry no GST, and cost roughly 0.5 percent a year. Digital gold carries 3 percent non-recoverable GST and sits outside SEBI’s remit. Digital gold wins only on minimum amount, since it starts at Rs 10, and on the ability to convert into physical metal.

How much GST is charged on digital gold?

Three percent on the purchase value, the same as on physical gold. It is not recoverable and it is not credited back when you sell, so you start every purchase roughly 3 percent behind plus the provider’s buy-sell spread.

Gold is not the decision that changes your finances - the recurring charges and the loan pricing usually are. But if you are buying gold, buy the right wrapper for the amount. Below Rs 25,000 the convenience of digital gold is worth the regulatory gap to most people. Above it, the GST alone argues for an ETF.

Written by Danish Mirza, founder of Unyfy. 14 years in Indian lending and collections at Standard Chartered, Barclays, Ola Money and Uni Cards.
Last reviewed 2026-09-09.