All of you must have heard about the new sovereign gold bonds i.e. SGBs that opened from 19th June to 23rd June. SGBs are the securities issued by the Reserve Bank of India that are valued in grams of gold. One doesn't have to physically store them in your house or bank but these are issued as bonds which makes it an excellent alternative to physical gold. There is zero risk of theft in SGBs. There are no storage problems and no making charges.
Isn't it attractive? Here’s all you need to know.
Issue Price and Subscription
One can subscribe to the SGB series from 19th June to 23rd June.
The issue price of these bonds is set at Rs. 5926 per gram based on the average prices of gold of 999 purity from 14th to 16th June. Meanwhile, you can get a discount of Rs. 50 per gram if the subscription and payment is done online. For investment in SGB, you will have to buy at least 1 gram of gold or 1 unit of SGB. The maximum limit is 4 kgs of gold or 4,000 units. You can purchase gold in grams.
Who can invest and for how long?
Indian resident individuals, HUFs, trusts, Universities and Charitable Institutions can apply for this. Although the maturity of SGBs is 8 years, you can exit after the completion of 5th year. If you meet the eligibility criteria and give a valid ID and you pay the application money on time, you will get an allotment. Gold bonds will be redeemed in Indian rupees at maturity.
How much return will you get?
After 8 years, the market rate of gold will be calculated according to the payout. Before the maturity date, the average price of 3 working days will be taken. Historically, SGBs have given a return of 9.5% to investors. Along with that, you will get interest at a rate of 2.5% per year. All this will be credited in your bank account. You would not have to pay GST or STT on SGBs. The 2.5% annual interest that you will get will be taxed according to your income tax slab. After maturity, no capital gain tax is imposed on redeeming. However, if you sell the bond through an exchange before maturity, 20% tax will be imposed on capital gains with indexation benefit if sold after 3 years.
Benefits of SGB
SGB has many more benefits. You can gift it, transfer it. Moreover, you can also take a loan by keeping it in your account. If it is listed on the exchange, you can trade it and applying for it is very easy. You can apply for SGBs on Upstox. Click to read more about Sovereign Gold Bonds: https://help.upstox.com/support/solutions/folders/278074
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