What is Paytm Gold ?
- 17 February 2018 | 417 Views | By Mint2Save
With over a 200 million users, Paytm is consistently inching itself towards its goal of one stop shop and service app. Getting another feather to its USP cap, Paytm has rolled out its digital gold services under the brand Paytm Gold. Having received a positive response from masses, this smart value creation tool has surprisingly emerged as a competitor to conventional gold jewellery traders. Let’s find out more about what Paytm Gold exactly is and how can one buy/sell it?
India is a country fascinated by gold. People in India would put in their savings into gold, and why not, the next best alternative to liquid cash is gold. It is a rare and amongst one of the most valuable commodities of the world. People like to put in their extra savings as well as invest into gold.
According to various surveys, India is the world’s largest consumer of gold, an estimated 24,000 tonnes of gold worth $ 900 billion is stocked in homes and bank lockers in India. Seeing this trend only the government of India had introduced two gold schemes in the Indian Income tax Act called Sovereign gold bond scheme and Gold Deposit Scheme. These schemes offer a good alternative to take exposure to gold as it offers additional interest. It is like investing in gold without practically keeping the gold physically with you. What makes these schemes attractive is the fact that any capital gains arising out of redemption of these sovereign gold bonds and gold deposit scheme are tax-exempt.
What is Paytm Gold?
A very recent addition to trading gold as a commodity apart from investing in gold-backed financial instruments such as exchange-traded funds (ETFs) is introduced by one of India’s largest e-commerce company- Paytm. Paytm is a digital wallet company backed by Alibaba. It is an exclusive Gold based investment Gold Accumulation Plan called “Paytm Digital Gold”. Paytm has introduced this product in coalition with India’s only Internationally Accredited Refinery MMTC-PAMP India Pvt. Ltd., which is a joint venture between MMTC Limited, a Govt. of India undertaking and PAMP Switzerland, a global leader in refining bullion.
The distinct qualities of Paytm Digital Gold allow Indians to buy, store and sell pure gold instantly for as low as Re.1/-. People can buy or sell the Gold in terms of fractions also like 0.1 gm or in Rupees, for example, Re.1 or Re. 2 etc. The best part includes buying or selling this Digital Gold at anytime-24 hours a day, 7 days a week, 365 days a year, including public and bank holidays.
How to buy or sell Paytm Digital Gold?
In Order to buy or sell gold on Paytm, the user needs to be a registered user on Paytm with a valid Paytm user ID and password. After logging in into the account, the user will have to select the option of “gold powered by MMTC-PAMP” plan. The user can see the live prices on which gold is being traded on the website in order to decide about the quantity of purchase or sales. The price at which the user chooses to buy or sell the digital gold is valid for only 6 minutes. The gold that user transacts to buy is then stored with MMTC-PAMP’s in their secure vaults. The buying and storage period for this digital gold is 5 years from the date of purchase within which the buyer either needs to sell or withdraw this digital gold. If the user redeems the gold after the custody period of five years, additional charges, as applicable at that time will be levied for carrying out any transaction.
For the payment of these digital gold, the buyer can either use their Paytm wallet, Debit/Credit cards, Net Banking, ATM Card, or any other mode of payment as Paytm may make available on their platform. After the successful payment, the invoice for this digital gold can be downloaded from the order page of Paytm under “My Orders” section on Paytm Web or App. Invoice is also sent as an attachment in the order confirmation email to the buyer’s email as provided.
As far as selling is concerned, the user can exercise either of the two options, either to redeem the gold as cash or in terms of gold coins/minted products. For the first option, at the time of selling, an IMPS fee of Rs. 10 will be charged and rest of the money will be transferred to your bank account within 72 hours. You will be required to share your bank account number and IFSC code to complete the sale transaction.
In case the user exercises the latter option, they can select the quantity and denomination of the gold they wish to withdraw from the available options of coins on the Paytm platform. Each coin has an additional making charge based on the design and weight of the coin and additional delivery charge too.
Paytm gold offers 24 karat gold of 99.9% purity. Gold is one of the desired form of investment for people in India, and Paytm gold making it easier for their users to invest in gold digitally.
Problems on the way
The biggest hurdle in this account is keeping the account active, which is done by transacting at least once in 6 months. If the user does not carry out any transaction within every 6 months, then Paytm may treat the users account as inactive and may close such account on its discretion. In such a situation the user will have to provide with identity proofs and other details for settlement purpose.
If the user’s intention is to invest in gold for a term more than 5 years then this not be a good option as Paytm hold your gold for a period of 5 years after which charges are applicable. Hence does not serve the purpose of long-term gold investors.
Another concern could be the taxation point as like Sovereign Gold deposit bond, Paytm digital gold is taxed like buying and selling physical gold. Hence, being a luxury investment, it does not provide tax benefits to the investors.
In the event of the death of the investor, the responsibility of communicating to Paytm lies with the legal heirs. In such a case, the account will be closed and the gold holdings will be provided to legal heirs.
Another drawback of Paytm gold is that once a transaction is placed (buy or sell) on this platform, the user cannot cancel it.
As there are different gold and gold-based investment options available in the market that vary quite a bit, the buyers need to evaluate these options vis-à-vis their needs and financial goals before investing.