NSE EGR vs Gold ETF: Electronic Gold Receipts (EGRs) Launched Recently by the National Stock Exchange of India (NSE) are Rapidly gaining Popularity among investor Looking to invest in gold. EGRs are Emerging as an Excellent alternative for those investor seeking investment option other than Physical gold. The introduction of NSE EGRs to the market come at a time when Gold Exchange-Traded Funds (ETFs) have already become one of the Most Preferred avenue for investor Wishing to invest in the Preciou metal market.
For investor seeking to Understand what NSE EGRs are and how they differ from Gold ETFs, here is a Detaile Breakdown of the Five key Difference between these two Gold investment options.
Also Read : Electronic Gold Receipts (EGR)
What is EGR in Stock Market?
Launched just Recently, NSE EGRs are dematerialized Securitie. Through them, investor can enjoy the benefit of gold ownership Without having to Worry about the Storage or Purity of the gold. Each unit of an NSE EGR is Backed by Physical gold, and investor can Easily buy and Sell these EGRs on the NSE Platform.
What is Gold ETF?
A Gold ETF (Exchange Traded Fund) is a Commodity Based fund that operate by Tracking the Domestic Gold Price of Physical gold. Investor can buy or Sell Gold ETFs on Stock exchange in exactly the Same way they trade the stock of a Company.
Further more, investor can also easily trade Unit of Gold ETFs on Platforms Such as Groww, Zerodha, Angel One and Upstox.
Also Read: How To Buy Electronic Gold Receipts
NSE EGR Backed by Physical Gold
NSE EGRs are backed by 99.9% pure physical gold. This physical gold is stored in vaults (secure strongrooms) recognized by the Securities and Exchange Board of India (SEBI), and complete records of these holdings are maintained through depositories such as CDSL or NSDL. Each NSE EGR receipt is fully backed by vaulted gold and can be bought or sold on the NSE just like other demat instruments.
On the other hand, Gold ETFs are funds that invest in gold and track the prices of this precious metal in real-time.
Conversion into Physical Gold
According to the official NSE Website, NSE EGRs offer an option allowing investor to Convert their Holding into Physical gold (Convert Physical gold into EGRs) by Following a Prescribed Procedure. In Contrast, No Such Option is Currently Available With Gold ETFs.
Gold ETFs vs. NSE EGR Taxation
Investing in NSE EGRs does not attract any GST, however if an investor decides to Convert their holding into Physical gold, they may be Required to Pay GST. Trading in NSE EGRs may also be subject to Capital Gains Tax.
Buying and Selling Gold ETFs does Not Attract any GST, however, investor may be Liable to Pay Long-Term Capital Gains (LTCG) tax or Short-Term Capital Gain (STCG) Tax. Additionally, investor may Sometime be Required to pay a Certain Percentage as a Fund Charge.
NSE EGR Liquidity
NSE EGRs Provide investor with the Facility to buy gold in an Electronic Format at a Uniform Price Across the Entire Country. The Price of gold remain identical Nation-wide at any given Moment. NSE EGRs are Backed by Pure gold. Similarly, Gold ETF Unit are backed by high-purity Gold held by the Respective funds, however, the Specific term and condition may Vary Acros different Asset Management Company (AMC).
Both of these investment instruments offer investors high liquidity and transparency, enabling them to trade at real-time gold rates.
Distinct Categorie
NSE EGRs are Available in two Distinct Categorie based on Purity: EGR 999 Purity and EGR 995 Purity. Gold ETFs, on the Other hand, are not Categorized Based on gold Purity however, Numerous option for Investing in Gold ETFs are Available through Variou Fund house.
NSE EGRs Can be Easily Traded on the Exchange, they offer greater convenience Compared to Physical gold and Provide both Liquidity and an assured Quality of gold. This Segment offers investor the facility of Fungibility Allowing for the conversion of gold into Physical Delivery within a Specified Limit along with a Guarantee of Settlement. Investor can hold NSE EGRs in their Demat account, just like share and Trade flexibly in Varying Quantitie of gold.
