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Sovereign Gold Bond scheme opens today: 10 things you should know before investing 

Sovereign Gold Bond scheme opens today: 10 things you should know before investing 

SGB scheme opens for subscription: Experts believe that it is a good time to diversify one's portfolio by investing 10-15% of investments in gold. 

Teena Jain Kaushal
Teena Jain Kaushal
  • Updated Mar 6, 2023 4:57 PM IST
Sovereign Gold Bond scheme opens today: 10 things you should know before investing The issue price of SGB Series IV 2022-23 is fixed at Rs 5,611 per gram of gold, which is Rs 202 higher compared with the issue price of Rs 5,409 per gram in December 2022

For those who want to diversify their portfolio, the last tranche of the Sovereign Gold Bond (SGB) Scheme 2022-23 of this financial year can be a good option, which is available for subscription from Monday. The issue price of SGB Series IV 2022-23 is fixed at Rs 5,611 per gram of gold, which is Rs 202 higher compared with the issue price of Rs 5,409 per gram in December 2022.  The subscription will be open till March 10. 

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Experts say considering high inflation, impending global volatility and underperforming equity markets it is a good time to diversify one's portfolio by investing 10-15 per cent of investments in the yellow metal. The first issue of SGB was launched in November 2015 at Rs 2,684 per gram, which means an annual return of around 10.5 per cent at current rates. 

Hence, if you are considering investing, here are 10 facts you should know about Sovereign Gold Bond (SGB) Scheme: 

1. Sovereign Gold Bonds are securities denominated in grams of gold issued by the Reserve Bank of India (RBI) on behalf of the Government of India. 

2. Though there is a sovereign guarantee, there is no physical backing of gold in SGBs.

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3. What sets SGB apart from other digital assets is the fact that it also offers an interest rate of 2.50 per cent per annum. At the time of maturity, the gold value at current market prices is returned along with the interest income. Remember, gold prices are driven by market forces and hence prices can move either way.

4. It is one of the cheapest ways of buying gold as there is no GST and other charges added to the issue price.  

5. The issue price is decided based on the average closing price for the last three working days of the week preceding the subscription period. These rates are published by the India Bullion and Jewellers Association Limited. To decide rates, the price of 999 purity gold is considered. 

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6. If you buy online then prices get reduced by Rs 50 per gram for those who make the payment through digital mode. 

7. One can invest a maximum of 4 kgs annually in these bonds. The minimum limit is 1 gram of gold

8. The bonds come with a tenure of eight years. You can, however, exit in the 5th, 6th and 7th years on the interest payment dates. For premature redemption, the investor needs to approach the concerned bank/post office at least one day before the coupon payment date. 

9. When you invest in SGB, a holding certificate is issued. The certificate is proof of possessing gold. You can also apply it in a demat form but at times it can be difficult to sell at exchanges because of low liquidity.

10. Most importantly, no tax is levied on the redemption of SGB after the completion of the maturity period. If you, however, sell it before 36 months, then it will be taxable as Short-Term Capital Gains and taxed as per your income tax slab. For gold held more than 36 months, it is treated as Long Term Capital Gain and is taxable at 20 per cent post-indexation.

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Also see: Sovereign Gold Bond scheme opens for subscription. Check details here

Also read: Sovereign Gold Bond (SGB) Scheme: Govt launches Series IV 2022-23, subscription open till March 10

Also read: Not a right time to restructure capital gains tax, say finance ministry sources

Published on: Mar 6, 2023 10:00 AM IST
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