Series IV of Sovereign Gold Bond 2023-24 is available for subscription, offering investors an opportunity to invest in gold in a structured manner.
Sovereign Gold Bond Series IV FY 2023-24: The Reserve Bank of India (RBI) has announced the opening of the next tranche of Sovereign Gold Bond (SGB) subscriptions, beginning February 12, 2024. This Series IV of the Sovereign Gold Bond Scheme 2023-24 will be available for subscription until February 16, 2024, offering investors an opportunity to invest in gold in a structured manner.
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Issue Details and Discounts:
The issue price for this tranche has been fixed at Rs 6,263 per gram of gold. However, investors opting for online payments will receive a discount of Rs 50 per gram, reducing the effective issue price to Rs 6,213. The bonds will be allotted on February 21, 2024, providing investors with a fixed window for subscription and allocation.
Interest Rate and Payment Schedule:
One of the key attractions of Sovereign Gold Bonds is the interest they offer. The interest rate specified by the RBI for these bonds stands at 2.50%. This interest is paid semi-annually, providing investors with a regular income stream. It’s noteworthy that when the scheme was initially launched, the interest rate was set at 2.75%. The interest accrued will be credited directly to the investor’s bank account.
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Tax Implications:
While Sovereign Gold Bonds offer a reliable investment avenue, it’s essential to understand their tax implications. The interest earned on SGBs is taxable according to the investor’s tax slab, as per the provisions of the Income Tax Act of 1961. Additionally, it’s important to note that Sovereign Gold Bonds do not qualify for tax benefits under Section 80C of the Income Tax Act. Therefore, the interest earned on these bonds is fully taxable in the hands of the investor.
Secondary Market Trading
Investors often wonder about the implications of selling their Sovereign Gold Bonds in the secondary market. When trading SGBs in the secondary market, the interest is typically adjusted proportionately and factored into the price. There exists a standardized process to ensure a fair and transparent adjustment, maintaining the integrity of the bond’s value.
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Risks Associated with SGBs:
Like any investment instrument, Sovereign Gold Bonds come with their own set of risks. The primary risk associated with SGBs is the potential for capital loss if the market price of gold declines. However, it’s crucial to understand that even if the market value of gold decreases, investors do not lose in terms of the units of gold they initially invested in. This distinction is important for investors looking to diversify their portfolios with exposure to gold without bearing the risks associated with physical ownership.
