Sovereign Gold Bonds 2023-24 Series IV to open on February 12: Here is what you should know

The Series IV issuance of the Sovereign Gold Bonds (SGB) 2023-24 is set to open for subscription on February 12. This can be an opportune moment for those considering investment with a dash of gold. Here's what you should know about these sovereign bonds.

Shashank, Head of Product Strategy, SahiBandhu Gold Loans- A leading Gold Loan aggregator platform, said that the subscription window for SGBs Scheme 2023-24 Series 4' will be open from February 12 to February 16 for a period of 5 days, with the issue price fixed at Rs 6,199 per gram. "Investing in SGB is a safe way to invest in gold instruments that are backed by the government," he added.

SGBs represent government securities valued in grams of gold. They are substitutes for holding physical gold. Introduced in 2015, this Reserve Bank of India (RBI) initiative aims to track the importation of gold and provide a viable alternative for individuals to own gold. The Series IV issuance of the SGB 2023-24 is a part of the planned SGB schemes being issued this year.

So, how does investing in these bonds work? One of the key advantages is that you get a guaranteed market value of gold at maturity, along with a fixed 2.50% annual interest throughout the bond's tenure, paid semi-annually. Such interest is taxable, but capital gains tax is exempt on redemption.

"The issuance price of SGBs would be reduced by Rs 50 per gram for investors who subscribe online and pay via digital means, allowing the investors to earn good market-based returns. The maturity earnings are tax-free if the SGBs are retained for 8 years, making it an enticing choice for investors looking for capital protection. These SGBs can also serve as collateral for loans," said Shashank.

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Their government backing ensures a higher level of safety compared to market-dependent alternatives, making them an attractive and secure investment avenue. Secondly, in times of financial need, one can avail of instant loans against these gold bonds, as mentioned above.

The SGBs will be available for purchase through banks (excluding Small Finance Banks and Payment Banks), designated post offices, the Stock Holding Corporation of India Limited (SHCIL) and stock exchanges (BSE and NSE).

The SGBs  have a maturity period of 8 years, allowing for an exit option after 5 years. Denominated in multiples of grams of gold, with a base unit of 1 gram, the minimum permissible investment is 1 gram of gold.

In a volatile market condition, an SGB can provide investors with an added degree of safety. Aside from the potential for significant returns, SGBs are also quite advantageous because they do not require physical storage and are free of issues related to purity in the case of gold in physical form.