Indians love gold. It is deeply valued as jewellery and also as an investment. Families buy gold during weddings, festivals, or just because ‘gold never loses value.’
But owning physical gold comes with its own set of problems. You have to worry about its purity, arranging safe storage, making charges, the risk of theft, and accepting resale deductions when you sell.
This is where financial products linked to gold started becoming popular.
First came Gold ETFs. Then Sovereign Gold Bonds (SGBs). And in 2022, SEBI introduced the concept of Electronic Gold Receipts or EGRs. With NSE’s recent launch in May 2026, investors now have a sophisticated way to buy, hold, and trade gold electronically.
At first glance, EGRs might look similar to Gold ETFs. By the end of this article, you’ll understand how they work a little differently.
What is an Electronic Gold Receipt?
An Electronic Gold Receipt (EGR) is a digital representation of physical gold stored in a SEBI-regulated vault, where each unit is backed by high purity gold of 995 or 999 fineness.
Think of it this way: You deposit gold into a highly secure vault. Instead of carrying that heavy metal, you receive a digital receipt confirming that you own it. That digital receipt is the EGR. It allows gold to function with the same agility as a stock, allowing you to:
- Hold it securely in your Demat account.
- Trade it instantly on an exchange,
- Convert it back into physical gold whenever you like it.
But why were EGRs introduced?
India is one of the largest consumers of gold in the world. Yet, the gold market itself is highly fragmented.
Gold prices differ from city to city, purity standards fluctuate, and buyers often depend on local jewellers for pricing.
So EGRs were introduced to bring standardisation and transparency into the system. The broader idea is to create a national-level electronic market for gold where investors can buy, sell, or trade gold at transparent prices.
This is also why EGRs are traded on stock exchanges.
How does the EGR work?
The EGR ecosystem operates within a regulated framework involving vault managers, depositories, and stock exchanges.
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The process begins when an entity deposits physical gold with a SEBI-approved vault manager, where the gold is strictly verified for its purity, weight, and quality standards.
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Once the gold is verified, an Electronic Gold Receipt is issued and credited to the owner’s Demat account. At this stage, the physical gold becomes tradable in electronic form.
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EGRs can now be bought or sold on stock exchanges, similar to shares or ETFs, without the hassle of physically handling gold.
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If you eventually want physical gold, you can surrender the EGR and take delivery of physical gold from the vault. This keeps EGRs backed by real, redeemable gold.
Who can invest in EGRs?
EGRs are available in different denominations, which makes them accessible to different types of investors.
- 1 gram for entry-level investors testing the waters
- 10 grams for regular retail investors
- 100 grams for HNIs or families making larger allocations
- 1000 grams for institutional investors
And like any other investment product, understanding how EGRs are taxed is also important.
How are EGRs taxed?
The taxation of EGRs is similar to Gold ETFs. If you sell EGRs within 12 months, the gains are treated as Short-Term Capital Gains (STCG) and taxed as per your slab rate. If you sell after 12 months, the gains become Long-Term Capital Gains (LTCG) and are taxed at 12.5%.
There’s also an important aspect here. When you convert physical gold into an EGR, or an EGR into physical gold, it is not treated as a transfer of asset under the Income Tax Act. So capital gains tax does not apply at the time of conversion. You only pay tax when you eventually sell the EGR on the exchange for a profit.
However, if you choose to take physical delivery of gold by redeeming the EGR, 3% GST will apply at the time of delivery since physical gold is involved. So while EGRs allow investors to hold and trade gold electronically, they still keep the option of taking physical delivery whenever needed.
Now, let’s see how EGRs are different from Gold ETFs.
How are EGRs different from Gold ETFs?
It might be easy to confuse the two. EGRs and Gold ETFs are both linked to gold prices, held in Demat accounts, and also traded on stock exchanges.
But there’s a fundamental difference between them. With Gold ETFs, you are betting on the price of gold. EGRs, on the other hand, are about actual ownership of physical gold. **
Here’s how they differ:
| Feature | Electronic Gold Receipts (EGRs) | Gold ETFs |
|---|---|---|
| Backed by | Physical gold in SEBI-regulated vaults | Gold or gold-related securities |
| Best suited for | Investors who want option of physical gold | Investors seeking price exposure |
| Physical delivery | Available | Not available |
| GST on delivery | 3% GST on physical withdrawal | GST is not applicable |
| Price based on | Real-time exchange price of gold | NAV based on fund holdings |
So you can say, EGRs sit somewhere between physical gold and Gold ETFs, offering features of both worlds.
FAQs
1. From when are EGRs available in India?
SEBI introduced the regulatory framework for EGRs in 2022, while NSE officially launched EGR trading on May 4, 2026. The system is still at a very early stage. Over time, participation from investors, jewellers, refiners, and institutions may help build a more organised gold market in India.
2. How are EGRs different from Gold Vault platforms?
Most Gold Vault or digital gold platforms, such as those offered through apps in partnership with jewellers or vault providers, allow users to buy and store gold digitally through private arrangements. EGRs, however, trade on national stock exchanges (NSE/BSE) and are governed by SEBI. Every gram you own is backed by physical gold in a SEBI-approved vault, tracked by a depository (NSDL/CDSL), and held in your Demat account.
3. How do I actually get the physical gold from an EGR?
To take delivery, you must accumulate the minimum threshold required under the contract, such as 10g, 100g, or 1kg. Once you place a surrender request through your broker, the EGR is debited from your Demat account, and you can collect the physical gold from a designated delivery center.
4. What happens if I sell the EGR instead of taking delivery?
If you sell your EGR on the exchange, it’s a pure financial transaction. The amount is credited to your bank account within the standard settlement cycle (T+1). In this case, 3% GST does not apply. You only pay capital gains tax on the profit.
5. Do EGRs have an expiry date?
Unlike Gold Futures or Options, EGRs do not expire and can be held in your Demat account for as long as you want. However, the Vault Manager may charge a nominal storage/custodial fee.
Eliminates concerns about theft and storage.
Gold prices can fluctuate, so EGR values may rise or fall.