In a country like India, gold has been of cultural and religious significance along with being a financial investment. Over the years, ways of investing in gold have increased, from physical gold purchase to digital gold. With technological advancement, online gold purchase has become popular in recent years. Investors can own digital gold without the risk of theft, storage problems and making charges.
Sovereign Gold Bonds (SGBs) are one such way to invest in gold and diversify your investment portfolio. The latest series of Sovereign Gold Bonds from the RBI is open for subscription. Here are the key details about the same:
⭐Subscription date
The latest tranche of SGBs will be available for subscription from 11 September 2023 (Monday) to 15 September 2023 (Friday). To invest in SGB through Upstox, click here.
⭐Issue price and issuer of bond
SGBs are backed by the Government of India. Hence, they carry no risk of default. Issue price for the latest tranche is ₹5,923. If you apply online and pay through digital modes, you can get a discount of ₹50 per gram, effectively bringing the price to ₹5,873.
⭐Minimum and maximum investment limit
Minimum permissible investment will be one gram of gold. One can apply for SGBs in multiples of one gram. Meanwhile, the maximum limit of subscription shall be 4 kilograms for individuals. In case of joint holding, the investment limit of 4 kilograms will be applied to the first applicant only.
⭐Eligibility and tenor
Indian resident individuals, HUFs, Trusts, Universities and Charitable Institutions are eligible to apply for SGBs. SGBs have a maturity of eight years, but exit options are available from the fifth year onwards. Unlike physical gold, these SGBs are traded on exchanges like NSE and BSE. Hence, buyers can trade through the exchanges as well. However, capital gains on sale of SGBs on the exchanges are subject to tax. More on that later.
⭐Interest payment
One of the key advantages of SGB over other forms of gold is the interest payment for holding bonds till maturity. Investors get 2.5% interest on investment, which is payable semi-annually along with capital appreciation on gold prices. In addition, SGBs can be pledged as collateral against a loan.
⭐Tax treatment
Interest on SGB is taxed as per the individual's tax slab. In addition, there is no capital gain tax on redemption of these bonds. Meanwhile, selling SGBs in the secondary market before maturity invites tax at the rate of 20% on capital gains arising on such transactions, with indexation benefits if SGB is sold after three years.
Download the Upstox App Today