Sovereign Gold Bonds: 8 benefits of investing in SGB - New SGB tranche (2024)

Table of Contents
New SGB tranche What is Sovereign Gold Bond? Assured returns Hassle free Tax treatment Tradability Transferability Collateral as loans GST NIL No capital gains tax

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Sovereign Gold Bonds: 8 benefits of investing in SGB - New SGB tranche (1)

Sovereign Gold Bonds 2022-23 (Series III) will be available for subscription from December 19 to 23, 2022, with a settlement date of December 27, 2022. The issue price of the Bond during the subscription period shall be Rs 5,409 (Rupees Five Thousand Four Hundred Nine only) per gram.

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What is Sovereign Gold Bond?

A sovereign gold bond (SGB) is a type of government security valued in kilos of gold. It serves as an alternative to real gold. These bonds are purchased by investors at the beginning of the plan, and at maturity, they are redeemed. The Indian government delegates management of the sovereign gold bond programme to the Reserve Bank of India. Here is a look at investing in Sovereign Gold Bonds.

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Assured returns

The annual interest rate on gold bonds is 2.50%. Keep in mind that this goes beyond the rise in the price of gold. On the nominal value, interest is paid every six months or every two years.

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Hassle free

Individuals can own gold without any physical possession. There are no risks and no cost of storage.

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Tax treatment

According to the ICICI Bank website, “The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.”

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Tradability

Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI. Trades in SGBs are not subject to the Security Transaction Tax either.

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Transferability

Bonds may be transferred by executing a transfer instrument in accordance with the provisions of the Government Securities Act.

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Collateral as loans

SGB holders can avail loan on Sovereign Gold Bonds. The maximum amount that can be availed is Rs 20.00 lakhs per individual.

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GST NIL

SGBs are tax-free, which is not the same as when purchasing physical gold, one must pay GST when purchasing actual gold.

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No capital gains tax

SGBs have an 8-year maturity duration, the capital gains tax is not applicable. However, if you exit after 5 years, capital gains tax will be applicable.

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Sovereign Gold Bonds: 8 benefits of investing in SGB - New SGB tranche (2024)
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