Sovereign Gold Bond Scheme
The government is going to launch a new tranche of the Sovereign Gold Bond (SGB) scheme before the new year arrives, the invitation application to subscribe will be open from December 19th to 23rd December. The bonds will be issued on the date of December 27 to those who satisfy the eligibility criteria mandated by the Reserve bank of India. The government makes this move to deter the impact of gold imports on the trade balance. The investors will be compensated at a fixed rate of 2.50% per cent per annum payable semi-annually on the nominal value.
SGBs can be purchased from Scheduled Commercial banks like SBI and HDFC Bank. You can also buy from Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges that are NSE and BSE. The SGBs are not available in Small Finance Banks, Payment Banks, and Regional Rural Banks institutions.
The issue price of the bond will be based on the average rate of gold having 999 purity, published by the Indian Bullion and Jewellers’ Association for the last three working days of the week just before the subscription. Anyway, those applying online and paying through digital mode will be entitled to a ’50’ discount. The minimum permissible investment is one gram of gold as the maximum is four kg for trusts in a year.
The Gold Bonds will be issued as Government of India Stocks under the Government Security Act, 2006. The investors will be provided with a holding certificate for the same. The Bonds are eligible for conversion from a physical account to a Demat form.
When the purchaser holds the bond till maturity, they will be exempted from tax on the capital gains earned either at maturity or redemption for individual investors. With this detail, the interest earned from each tenure is taxable yet the redemption TDS either redemption during redemption or when the time interest is disbursed. If a non-individual investor is on the transfer bonds before maturity, indexation benefits apply to the term capital gains.
The sovereign bond is highly liquid because the investment can be used as collateral for loans. The investors will benefit by having a fixed rate of interest as well as not being bonded with any storage cost. This is a fully credit-free form of investment.
If you miss out on investing in SGBs this time, you can avail of the opportunity in the next tranche that would be issued in March 2023. The subscription application will be open between March 6 to March 10 with an issuance date of March 14, 2023.