All the glitters is rightly GOLD: Sovereign Gold Bonds
- December 8, 2021
- Posted by: MvM Team
- Categories: Gold, Uncategorized
Are you looking to invest in gold but are grappling with issues like where and how to buy, purity, and risk of storage? Look no further because we have right product for you.
Sovereign Gold Bonds (SGBs) are government backed securities issued by RBI to encourage individuals/HUF/trusts to buy digital gold.
There are several benefits of buying SGB vis-à-vis buying physical gold as mentioned below:
- Risk and costs of storage are eliminated.
- No risk of purity and extra savings on expenses such as making charges.
- Additional regular earnings in the form of 2.5% interest p.a., paid bi-annually.
- Liquid as bonds are tradable on stock exchanges.
- Chance of capital appreciation in value of gold by the time of maturity.
- Benefit of indexation on Long Term Capital Gain (LTCG).
- No capital gain tax on redemption.
Everything about SGB’s:
Features | Details |
Issuer | RBI, on behalf of Govt. of India (GOI) |
Who can buy? | Resident Individuals, HUFs, Trusts, Universities |
Minimum Investment | 1 gram and thereafter in multiples of 1 gram |
Maximum Investment | Individual & HUF - 4 Kgs (per year) |
Interest | Fixed 2.50% per annum payable bi-annually. |
Tenure | 8 years, with exit option in 5th, 6th, and 7th year. |
Discount | Rs50/gram on the issue price of bond on online application |
Holding | Hold in certificate form or in Demat Account. |
Liquidity | Tradable on stock exchanges (NSE/BSE) |
Taxation | - Interest is taxable as per your slab. |
Collateral | - SGB’s can be used as collateral for loans. |
Risk | Fall in value of gold at the time of maturity/selling as is the case with physical gold/jewellery. |
Nomination Facility | Available |
How to Apply?
Sovereign Gold bonds can be bought both online and offline. Majority of banks have been have allowed by the RBI to act as sales channels, along with designated post offices & Stock Holding Corporation of India Ltd.
You can also apply through your broking agent and hold them in your D-Mat Account. It is advisable to apply online as it allows you to avail the discount of Rs 50 per gram.
Upcoming Issues of Sovereign Gold Bonds:
Sr.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 |
MvM View
Individuals should hold some proportion of their portfolio in gold as it acts as a hedge against times such as the COVID pandemic.
Individuals/HUF/Trusts looking to invest in physical gold should invest in SGB’s instead. It gives them guaranteed regular return in the form of bi-annual interest payment, as well as eliminates storage cost & making charges and the risk of theft associated with holding jewellery or physical gold.
