Sovereign Gold Bond 2023-24: Subscription for 1st tranche opens on Monday; check how to buy

The first tranche of Sovereign Gold Bond Scheme (SGB) 2023-24 - Series I, backed by the central government, will open for subscription from June 19, Monday. The government has fixed the issue price at Rs 5,926 per gram of gold. The issue will be opened for subscription during the period June 19-23, with the settlement date of June 27, the Finance Ministry said in a statement on Friday.

The Centre in consultation with the Reserve Bank of India (RBI) has decided to allow a discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. 

On June 14, the RBI in a notification said the first tranche of the 2023-24 series will be released from June 19 to 23, while the second tranche will be issued from September 11 to 15, 2023. The release date for the first tranche is June 27, and the release date for the second tranche is September 20.

Tranche	Date of Subscription	Date of Issuance	Issue price
2023-24 Series I	June 19 - June 23, 2023	June 27, 2023	Rs 5,926 per gram
2023-24 Series II	September 11-September 15, 2023	September 20, 2023	TBD

Sovereign Gold Bond Scheme

SGBs or Sovereign Gold Bonds are issued by the RBI on behalf of the Centre as an alternative to buying physical gold. The SGB scheme was launched by the government in November 2015, under Gold Monetisation Scheme. The SGBs were launched with the objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of gold, into financial savings.

Tranche	Subscription Period	Price offered
2022-23 Series I	June 20-24, 2022	Rs 5,041 per gram
2022-23 Series II	August 22-26, 2022	Rs 5,091 per gram
2022-23 Series III	December 19-27, 2022	Rs 5,409 per gram
2022-23 Series IV	March 6-10 2023	Rs 5,611 per gram
2023-24 Series 1	June 19-23, 2023	Rs 5,926 per gram

Interest rate of SGBs

Investors in SGBs are entitled to a fixed interest rate of 2.50 per cent a year, payable semi-annually on the nominal value.

Lock-in period and tenor

The lock-in period for the scheme is 8 years, but exit options are available in the 5th, 6th, and 7th years, which are exercised on the interest payment dates. And the interest rate, which has been constant since its inception, is 2.5 per cent.  

Can you buy SGB 2023-24- Series I?

The Centre-backed gold bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.  

The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April 2023-March 2024).

SGB price calculation  

According to RBI, the gold bond's nominal value is based on the simple average of the closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity on the last three working days of the week preceding the subscription period, namely June 14, June 15, and June 16, 2023.  Based on this, the Centre has fixed the issue price to 5,926 per gram of gold.

SGBs can be bought through these channels

> Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL)

> Recognised stock exchanges either directly or through agents.

How To Buy Sovereign Gold Bonds Online    

SGBs can be bought online via some commercial banks’ websites. Following steps can be followed to buy the bonds online.

1. Login to the mentioned bank’s internet account.

2. Look for the e-service option, and click on it. Press on the “Sovereign Gold Bond” option.

3. Please go through the “Terms and Conditions” put down by RBI and “Proceed”.

4. Fill up the registration form and select “Submit”.

5. Keep your Aadhaar card and Pan card details handy.

6. In the purchase form put the quantity of subscription and the nominee details.  

7. After verifying the details, click on the “Submit” option.

Discount on purchase

The RBI and the Centre have decided to offer a discount of Rs 50 per gram on the issue price to investors who apply online and pay through digital means, like UPI or wallet.

The issue price of a Gold Bond for such investors will be Rs 5,876 per gram of gold.

Different ways to buy SGBs

Investors can either buy the SGBs in physical, digital or dematerialised format. Once purchased physically, investors can get these bonds credited to their demat accounts by making a specific request for it. RBI then processes the dematerialization at their end and until when the bonds are held in RBI’s books.

The demat process can also be done post-allotment. Investors, who are not buying directly from the RBI, can buy the units from the secondary market i.e., from stock exchanges.

You can also buy these bonds after the last subscription date. SGBs can be bought while primary issuance by the Reserve Bank of India (RBI) and in the secondary market on stock exchanges such as the NSE and BSE.

Why should you opt for SGBs

The SGBs are a great alternative to physical gold, whose storage can be a problem.  

Besides, there is no applicable tax deducted at source on SGBs.

The SGBs price is linked to the gold price of 999 purity.

The bonds can be used as collateral for applying for a loan.

The bond’s tenure is for eight years but has the flexibility of redemption after five years with a sovereign guarantee on the redeemed amount and interest.

Tax treatment

Under the Income Tax Act of 1961 (43 of 1961), interest on SGBs will be taxed. The capital gains tax arising on redemption of SGB to an individual is exempted.  

Long-term capital gains resulting from the transfer of SGBs will be eligible for indexation benefits.

"Sovereign Gold Bonds present a compelling investment opportunity for several reasons. Firstly, they allow investors to participate in the potential growth of gold as an asset class, with prices having doubled in the past 10 years. SGB offers the convenience of purchasing as little as one gram of gold, providing accessibility to retail investors. The dematerialized form of the bonds ensures purity and eliminates concerns about deductions associated with physical gold,” said Abhijit Roy, CEO, GoldenPi.

“Overall, SGB combines the potential for long-term appreciation, convenience, purity assurance, interest earnings, and tax benefits. By diversifying their portfolios with SGB, investors can seize the opportunity to invest in gold in a regulated and secured manner, positioning themselves for potential growth and hedging against inflation,” Roy added.

“Investment in SGBs has helped the RBI raise over Rs 30,000 crore since its inception in November 2015. Investment in paper, digital gold provides high liquidity, eliminates storage costs, and is easier to sell than physical gold. Investment in SGBs comes with an interest coupon payable semi-annually. Gold prices have gained 18% in FY23, around 8% YTD. Also, SGB has posted double-digit gains since its inception in 2015," said Nish Bhatt, Founder & CEO, Millwood Kane International.

Also read: Sovereign Gold Bond Scheme (SGB) 2023-24 (Series I): Issue price announced, check rates here

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