Sovereign Gold Bond Scheme: Sovereign gold bonds are government securities denominated in grams of gold. They are alternatives to holding physical gold. Investors have to pay the issue price and on maturity, the bonds will be redeemed in cash. The bond is issued by the Reserve Bank on behalf of the Government of India.
On September 11, the latest tranche of the Sovereign Gold Bond Scheme 2023-24 – Series II became available for subscription and will remain available till Friday, September 15. The price of one gram of gold is Rs 5,923.
Also Read: Sovereign Gold Bond: Here’s how to buy SGB through SBI, ICICI, PNB and Canara Bank
For investors who apply online and make payments against the application using digital methods, the issue price of gold bonds will be Rs 50 per gram less than the face value.
Key things to know about Sovereign Gold Bonds
Why should you buy SGB instead of physical gold? what are the benefits?
The quantity of gold for which investors pay is safe, as they receive the current market price at the time of redemption/premature redemption. SGB provides a better option to hold gold in physical form. Storage risks and costs are eliminated.
Investors are assured of the market value of gold at the time of maturity and periodic interest. SGB is free from issues like manufacturing charges and purity in the case of gold in jewelry form. The bonds are kept in the books of RBI or in demat form thereby eliminating the risk of loss on shares etc.
Are there any risks in investing in SGB?
There may be a risk of capital loss if the market price of gold falls. However, the investor does not suffer a loss in terms of the units of gold he has paid for.
Who is eligible to invest in SGB?
Persons resident in India as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGBs. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.
Individual investors can continue to hold SGBs till early redemption/maturity after a subsequent change in residential status from resident to non-resident.
What is the minimum and maximum limit of investment?
The bonds are issued in denominations of one gram of gold and multiples thereof.
The minimum investment in the bond is one gram, with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and trusts and similar entities as notified by the Government from time to time per financial year (April) Is 20 kilograms. – March).
In the case of joint holding, the limit applies to the first applicant. The annual limit will include bonds subscribed under various tranches during initial issuance by the government and bonds purchased from the secondary market. The investment limit will not include holdings held as collateral by banks and other financial institutions
What is the interest rate and how will the interest be paid?
The bond bears interest at the rate of 2.50 percent (fixed rate) per annum on the initial investment amount. The interest will be credited to the investor’s bank account half yearly and the final interest will be payable on maturity along with the principal amount.
At what price are bonds sold?
The nominal value of the Gold Bond is in Indian Rupees, which is decided on the basis of the simple average of the closing price of gold of 999 purity published by India Bullion and Jewelers Association Limited for the last 3 business days of the week preceding the subscription period.
Who are the authorized agencies selling SGB?
The bonds are sold through offices or branches of nationalized banks, scheduled private banks, scheduled foreign banks, designated post offices, Stock Holding Corporation of India Limited (SHCIL) and authorized stock exchanges, either directly or through their agents.
Can you apply online?
Yes. Customers can apply online through the websites of listed scheduled commercial banks. The issue price of gold bonds will be Rs 50 per gram less than the face value for investors applying online and payment against the application will be made through digital mode.
Is Tax Deducted at Source (TDS) applicable on bonds?
TDS is not applicable to bonds. However, it is the responsibility of the bondholder to comply with tax laws.