The latest tranche of sovereign gold bonds (SGB) opened for subscription on 19 June. Investors can invest in SGBs through their demat accounts or via online banking. The country’s top lender State Bank of India (SBI) allows buying SGBs online. In a tweet, SBI said, “Get returns and safety together with Sovereign Gold Bonds.
Here is why you should invest in Sovereign gold bonds:
1) Assured returns of 2.5% p.a. payable half-yearly
The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
2) No storage hassles like physical gold
Unlike physical gold, there is no issue of storage when it comes to investing in SGBs, hence they are more secure.
3) No Capital Gain Tax on redemption
The government launched the Sovereign Gold Bond Scheme in November 2015 under Gold Monetisation Scheme. Under the scheme, RBI makes the issues open for subscription in tranches.
4) Liquidity
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
5) Can be used as collaterals for loans
Sovereign gold bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the Reserve Bank of India (RBI) from time to time. The lien on the bond shall be marked in the depository by the authorised banks.
6) No GST and making charges
No goods and services tax (GST) is levied on sovereign gold bonds, unlike gold coins and bars. When you buy digital gold, you need to pay 3% of GST just like in the case of buying physical gold. Also, there are no making charges on SGBs
“There are few avenues to invest in gold. Some people prefer to invest in physical gold that can be worn on a daily basis. Some are artistic pieces passed on to future generations. Other than physical gold, there are some platforms offering digital gold. Then there are gold ETFs, and finally, we can invest in paper gold. Gold prices have gained over 17% in FY23, around 8.2% YTD. The gold bond scheme floated by the RBI in 2015 has provided double-digit returns. Gold prices traded with mixed cues until the Fed announced its monetary policy last week,” said Colin Shah, MD, Kama Jewelry on SGB Series-I 2023-24.3
Sovereign Gold Bond 2023: Issue price, and discount
The government has fixed the issue price at ₹5,926 per gram of gold for the first tranche of the Sovereign Gold Bond Scheme 2023-24, which opened for subscription for five days starting Monday. A discount of ₹50 per gram from the issue price to those investors who apply online. For such investors, the issue price of a Gold Bond will be ₹5,876 per gram of gold.
