The cost is calculated by taking an average of closing prices of gold for the latest three working days preceding the subscription period. The gold in this bond is sold on a per unit basis such that every unit derives its value from underlying one gram gold with 999 purity. By diversifying their portfolios with SGB, investors can seize the opportunity to invest in gold in a regulated and secured manner, positioning themselves for potential growth and hedging against inflation,” Roy added.Sovereign gold bonds or SBGs are gold bonds issued by the Reserve Bank of India (RBI) on behalf of the Government of India. “Overall, SGB combines the potential for long-term appreciation, convenience, purity assurance, interest earnings, and tax benefits. The dematerialized form of the bonds ensures purity and eliminates concerns about deductions associated with physical gold,” said Abhijit Roy, CEO, GoldenPi. SGB offers the convenience of purchasing as little as one gram of gold, providing accessibility to retail investors. Firstly, they allow investors to participate in the potential growth of gold as an asset class, with prices having doubled in the past 10 years.

'Sovereign Gold Bonds present a compelling investment opportunity for several reasons. Long-term capital gains resulting from the transfer of SGBs will be eligible for indexation benefits. The capital gains tax arising on redemption of SGB to an individual is exempted. Under the Income Tax Act of 1961 (43 of 1961), interest on SGBs will be taxed. The bond’s tenure is for eight years but has the flexibility of redemption after five years with a sovereign guarantee on the redeemed amount and interest. The bonds can be used as collateral for applying for a loan. > Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL) SGBs can be bought through these channels Based on this, the Centre has fixed the issue price to 5,926 per gram of gold. The minimum permissible investment will be 1 gram of gold and the maximum limit of subscription shall be 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April 2023-March 2024).Īccording to RBI, the gold bond's nominal value is based on the simple average of the closing price for gold of 999 purity on the last three working days of the week preceding the subscription period, namely June 14, June 15, and June 16, 2023. The Centre-backed gold bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.

And the interest rate, which has been constant since its inception, is 2.5 per cent. The lock-in period for the scheme is 8 years, but exit options are available in the 5th, 6th, and 7th years, which are exercised on the interest payment dates. Investors in SGBs are entitled to a fixed interest rate of 2.50 per cent a year, payable semi-annually on the nominal value. The SGBs were launched with the objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of gold, into financial savings. The SGB scheme was launched by the government in November 2015, under Gold Monetisation Scheme. SGBs or Sovereign Gold Bonds are issued by the RBI on behalf of the Centre as an alternative to buying physical gold.

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