Sovereign Gold Bonds have multiple advantages over other forms of gold investments. Apart from capital appreciation, SGBs offer a 2.5 per cent interest on the capital appreciation and there is no capital gains tax if one remains invested for 8 years.
New Delhi: The government of India has decided to issue two tranches of sovereign gold bonds (SGBs) during the first half of the current financial year. The first tranche will be available for subscription from Monday, 19 June 2023 to 23 June 2023 and the second tranche will open from 11 September 2023 to 15 September 2023.
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The issue price of the Sovereign Gold Bond Scheme (SGB) 2023-24 – Series I – is Rs 5,926 per gram of gold while there is a discount of Rs 50 for those investors who subscribe to it online. The subscription period closes on Friday.
How Is Nominal Value Of Sovereign Gold Bond Calculated?
The nominal value of the bond is based on the simple average closing price published by the India Bullion and Jewellers Association Ltd (IBJA)) for gold of 999 purity in the last three working days of the week preceding the subscription period. In this case, it is June 14, June 15, and June 16, 2023.
SGB’s Advantage Over Other Forms Of Gold
Sovereign Gold Bonds have multiple advantages over other forms of gold investments. Apart from capital appreciation, SGBs offer a 2.5 per cent interest on the capital appreciation and there is no capital gains tax if one remains invested for 8 years.
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SGBs are highly liquid and are traded on exchanges. There is a sovereign guarantee and no danger of default. Experts advise investors to stay invested for 8 years to take benefits of capital gains tax exemption.
Selling SGB Before Maturity
When you sell a sovereign gold bond in the secondary market before maturity, you’d be taxed 20 per cent on capital gains. The instrument gives indexation benefits to the buyers if the SGB is sold on or after three years and would also be subject to marginal tax rate if sold before three years.
Why Should You Buy SGBs?
- Good long term investment bets and capital appreciation is likely to happen significantly if one holds it for 8 years.
- Purity is confirmed and there won’t be a risk of default because SGB is backed by Sovereign guarantee.
- No capital tax gains if held for 8 years.
- SGBs are traded on exchanges hence are highly liquid, unlike physical gold.
- Investors get 2.5 per cent interest on investment which is payable semi-annually.
- Can be pledged as collateral if one seeks a loan.
- Retail investors get SGBs on discount if the application is made online.
Where Can Investors Buy SGB?
- Scheduled Commercial banks (except Small Finance Banks, Payment Banks, and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL),
- Clearing Corporation of India Limited (CCIL),
- Designated post offices (as may be notified) and
- Recognised stock exchanges either directly or through agents.
