Sovereign gold bonds (SGBs) have emerged as a favored investment avenue, witnessing a substantial surge in investor interest. In the fiscal year 2023-24, investors poured in Rs 27,031 crore into SGBs, marking a significant increase from the previous fiscal year’s investment of Rs 6,551 crore. This surge in investment reflects a growing attraction towards SGBs among investors, driven by the potential for higher returns and associated tax benefits.
The quantum of SGBs purchased by investors during 2023-24 amounted to an impressive 44.34 tonnes of gold, compared to 12.26 tonnes purchased in the preceding fiscal year, PTI reported.
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The Reserve Bank of India, acting on behalf of the central government, facilitated the issuance of SGBs amounting to Rs 27,031 crore during the fiscal year 2023-24. This underscores the government’s commitment to promoting SGBs as a viable investment option for both individual and institutional investors.
Since the inception of the SGB scheme in November 2015, a total of Rs 72,274 crore (equivalent to 146.96 tonnes of gold) has been raised through 67 tranches.
Key Features of Sovereign Gold Bonds
Tax Benefits and Returns
SGBs offer investors the dual advantage of potential capital appreciation and tax benefits. These bonds are exempt from capital gains tax, making them an attractive proposition for investors seeking tax-efficient investment avenues. Additionally, SGBs bear interest at a fixed rate of 2.50 per cent per annum on the initial investment amount, further enhancing their appeal.
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Denomination and Investment Limits
SGBs are issued in denominations of one gram of gold and its multiples, making them accessible to a wide range of investors. The minimum investment requirement is set at one gram, with individual investors allowed a subscription limit of up to 4 kg per fiscal year (April – March). Similarly, Hindu Undivided Families (HUFs) can invest up to 4 kg, while trusts and similar entities notified by the government have a higher limit of 20 kg per fiscal year.
Accessibility and Distribution Channels
To facilitate easy access for investors, SGBs are sold through various channels, including nationalized banks, scheduled private banks, scheduled foreign banks, designated post offices, and authorized stock exchanges. This broad distribution network ensures that investors can conveniently invest in SGBs through their preferred financial intermediaries.
