Sovereign Gold Bonds are bonds issued by the Reserve Bank of India on behalf of the Government of India. SGBs are denominated in grams of gold. The price of each gram is linked to the value of gold with 999 purity.
In one financial year, the RBI issues around SGBs in 12 intervals or tranches.
Read on to find out more on sovereign gold bonds and the ongoing tranche.
SGB Tranche Series IX
SGB’s tranche series IX will be open for subscription from February 28 to March 4, 2022. The price for this tranche is Rs 5,059 per gram.
The RBI gives a discount of Rs 50 per gram for investors who apply for SGB through an online platform.
Here’s a summary of the recent and upcoming tranches of the sovereign gold bond scheme:
| S.No. | Tranche | Date of Subscription | Date of Issuance |
| 1. | 2021-22 Series VII | October 25–29, 2021 | November 02, 2021 |
| 2. | 2021-22 Series VIII | November 29-December 03, 2021 | December 07, 2021 |
| 3. | 2021-22 Series IX | January 10-14, 2022 | January 18, 2022 |
| 4. | 2021-22 Series X | February 28-March 04, 2022 | March 08, 2022 |
What Is Sovereign Gold Bonds (SGB)?
SGBs are issued by the Government of India but are managed and supervised by the Reserve Bank of India (RBI). SGBs are basically government securities that are backed by gold. They are a substitute for holding physical gold. Forms of physical gold are coins, bars, jewellery among others.
SGBs are not backed by physical gold and are a part of the government’s borrowing programme. Investors get an opportunity to invest in SGBs in tranches.
What Does Tranche Mean?
Government issues gold bonds for sales in portions and intervals. One such interval is called a tranche and a tranche is open for a maximum of 4-5 days. You can apply for sovereign gold bonds online during the subscription period.
What Are the Main Characteristics of Sovereign Gold Bonds?
Tenure and lock-in: SGBs have a term of eight years with a lock-in period of five years. The exit options for SGB are available in the 5th, 6th and 7th year and the option needs to be exercised on the interest payment dates.
Returns: There are two ways you can earn money through sovereign gold bonds. One way is through an interest rate that is payable every six months. The interest rate is fixed by the government at 2.5% per annum. You may also get some capital gains at the time of redemption if the price rises by then.
Tax Treatment: The capital gains is tax-free although the interest earned is taxable according to the income tax slab the investor falls under.
Interest: The interest earned during a financial year is clubbed with the investor’s annual income and taxed according to the applicable income tax slabs.
Capital gains: If an investor holds the bond until maturity (8 years), then the capital gains earned do not attract any capital gains tax. If you redeem the bond prematurely, the tax treatment is a bit different.
Ways Of Investing In Gold Bonds
Sovereign gold bonds are available in the primary and secondary market.
Primary Market: These bonds are available in offline and online modes. brokerage firms, net banking apps of almost all banks, designated post offices are some of the popular online/offline modes of payment.
Secondary Market: Gold Bonds are also tradable on stock exchanges within a fortnight of the issuance which becomes the secondary market.
We hope you found this update insightful.
Happy Investing!
Disclaimer: The content presented here is only for educational and informational purposes. It is not intended to be advice on what to buy or sell.
I have a substantial understanding of Sovereign Gold Bonds (SGBs) and the mechanics involved in their issuance and trading. These bonds are a fascinating instrument issued by the Reserve Bank of India (RBI) on behalf of the Indian government, denominated in grams of gold with a purity of 999. The SGBs are an integral part of the government’s borrowing program and act as an alternative to physically holding gold in forms such as coins, bars, or jewelry.
Each financial year sees the RBI issuing SGBs in several intervals or tranches, with each tranche open for subscription for a limited period. For instance, Series IX, which was open for subscription from February 28 to March 4, 2022, had a price set at Rs 5,059 per gram. Investors applying for SGBs online received a discount of Rs 50 per gram. This strategy encourages online participation in the bond subscription process.
The tenure and lock-in period for SGBs span eight years and five years, respectively. However, exit options are available in the 5th, 6th, and 7th years, which need to be exercised on specific interest payment dates. Returns from SGBs come in two forms: a fixed interest rate of 2.5% per annum paid semi-annually and potential capital gains at redemption if the gold price escalates.
Tax treatment for SGBs involves tax-free capital gains if held until maturity, while the interest earned is taxable according to the investor’s income tax slab. These bonds are available in both primary and secondary markets, allowing investors to purchase them through various online and offline modes, including brokerage firms, net banking apps, and designated post offices. Additionally, they become tradable on stock exchanges within a fortnight of issuance, constituting the secondary market.
The terminology used in the article—Sovereign Gold Bonds, tranche, tenure, lock-in period, returns, tax treatment, primary market, secondary market—pertains to different aspects of SGBs, encompassing their issuance, features, subscription process, and trading mechanisms. Understanding these terms aids in comprehending the intricacies of investing in these government-backed gold-linked securities.
If you're considering investment options, understanding the specifics of Sovereign Gold Bonds can be advantageous. Always seek personalized financial advice before making investment decisions, as individual circ*mstances vary.
