For years, the smart-money answer to "how should I buy gold" was simple: Sovereign Gold Bonds. That answer just expired. With no new SGB tranches issued after March 2026, gold ETFs have become the default way to own gold on paper, digital gold remains the option for small buyers, and physical gold stays what it always was, a jewellery and gifting choice rather than an investment. The menu shrank, so knowing the trade-offs matters more than ever.
Each route buys you the same metal but a very different experience on cost, tax, liquidity, and safety. Here is how they stack up now.
The four routes at a glance
| Option | Cost drag | Tax on gains | Liquidity | Safety |
|---|---|---|---|---|
| SGB (existing only) | Lowest, plus 2.5% interest | Tax-free at 8-year maturity | Low, listed but thin | Sovereign backing |
| Gold ETF | Low expense ratio, no GST | 12.5% LTCG after 12 months | High, trades like a stock | SEBI-regulated |
| Digital gold | 3% GST plus buy-sell spread | Like physical gold | High, 24x7 on apps | Not SEBI-regulated |
| Physical gold | 6-25% making charges, storage | LTCG after 24 months | Medium, resale haircut | Theft and purity risk |
The standout loss is the SGB, which combined the lowest cost, a 2.5% coupon, and tax-free gains at maturity, a package no other option matches. Anyone holding existing SGBs has a reason to keep them, but that door is shut for new money.
Why gold ETFs win the default slot
With SGBs gone, gold ETFs are the natural replacement for investors who want gold exposure without the drawbacks of physical metal. They carry no GST at purchase, trade on the exchange at live prices, and are regulated by SEBI, which removes the counterparty worry that hangs over digital gold. For anyone already investing in equity through a demat account, adding a gold ETF is frictionless.
The tax treatment is the one catch to remember. A gold ETF held beyond 12 months is taxed at 12.5% without indexation, and it does not get the Rs 1.25 lakh exemption that equity funds enjoy, as explained in our capital gains tax 2026 guide. Even so, the combination of low cost, liquidity, and regulation makes it the cleanest way to hold gold as a portfolio asset.
Where digital and physical still fit
Digital gold has one real strength: you can start with a hundred rupees. For micro-investors, people without a demat account, or those gifting small amounts, digital gold is the easiest on-ramp, even though the 3% GST, the buy-sell spread, and the lack of SEBI oversight make it a poor home for large, long-term holdings.
Physical gold, meanwhile, is honest about what it is for. Making charges of 6% to 25%, storage worries, and purity risk make coins and jewellery inefficient as an investment, but they remain the right choice for weddings, festivals, and the cultural role gold plays in Indian households. For a sense of live pricing before you buy, our gold rate today in India page tracks the daily 24K and 22K rates, and gold vs silver in 2026 weighs the two metals against each other.
The practical takeaway is that the gold question in 2026 is no longer "which is best overall" but "which fits this rupee." A large, long-term allocation leans to ETFs, a small recurring buy to digital gold, and a wedding purchase to physical, with SGBs now a legacy holding rather than a live choice.