Last Updated on 8 months ago by Raj Kumar
Sovereign gold bond scheme – SGB
Sovereign gold bond scheme has to be one of the best ways to invest in Gold. It is not only secure, it gives you interest on top of the Gold price appreciation. If you want to invest in Gold then you have no better choice that the Sovereign gold bond scheme.
Consider reading – How to invest in gold in India – 5 Best ways
In this article lets discuss in details about the Sovereign gold bond scheme.
Here is the RBI circular on the Sovereign gold bond scheme when it was initially launched.
What is Sovereign gold bond scheme?
Sovereign gold bond (SGB) are government securities denominated in grams of gold. They are substitutes for holding physical gold.
Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
Who is eligible to invest in Sovereign gold bond scheme?
Individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
Can a Minor invest in Sovereign gold bond scheme?
Yes Minors can invest in Sovereign gold bond scheme. The application on behalf of the minor has to be made by his/her guardian.
What is the minimum and maximum limit for investment in Sovereign gold bond scheme?
The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond is one gram with a maximum limit of subscription of 4 kg per year for individuals, 4 kg per year for Hindu Undivided Family (HUF) and 20 kg per year for trusts and similar entities notified by the government from time to time per fiscal year (April – March).
In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions
What is the rate of interest offered in Sovereign gold bond scheme?
The Sovereign gold bond scheme has interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
How to purchase Sovereign gold bond scheme?
Sovereign gold bond are sold through offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Offices, Stock Holding Corporation of India Ltd. (SHCIL) and the authorised stock exchanges either directly or through their agents.
At what price Sovereign gold bonds are issued?
The nominal value of Gold Bonds is on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.
What is the redemption process for Sovereign gold bond scheme?
The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
Is the Sovereign gold bond scheme transferable?
Yes the Sovereign gold bond scheme is transferable to a relative/friend/anybody who fulfils the eligibility criteria.
Can I take loan against the Sovereign gold bond?
Yes, Loans can be availed against the Sovereign gold bond. The Loan to Value ratio for Sovereign gold bond will be the same as applicable to ordinary gold loan prescribed by RBI.
How much tax is payable on Sovereign gold bond?
There are no capital gains to be paid on the gains as part of Sovereign gold bond if you hold it till maturity.
How ever, There are 2 parts to tax assessment in case of Sovereign gold bond
1. Tax on interest earned – Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961)
2. Capital gains tax on Sovereign gold bond scheme
If the investor stays invested for the entire duration of Sovereign gold bond scheme then The capital gains tax arising on redemption of Sovereign gold bond to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.
What is the withdrawal mechanism in Sovereign gold bond in case of death of the investor?
In the cases where Nominee is appointed -The nominee/nominees to the bond may approach the respective Receiving Office with their claim. The claim of the nominee/nominees will be recognised in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007.
In the cases where Nominee is not appointed – In the absence of nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) may be submitted to the Receiving Offices/Depository.
It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.
How soon I can sell my investment in Sovereign gold bond scheme?
With in a fortnight of allocation of units.
You can sell your investment in Sovereign gold bond scheme anytime in the secondary market as it gets traded as ETF. However, if you sell your Sovereign gold bond scheme within a period of 3 years then you are liable to pay short term capital gains tax at the peak rate that is applicable to you.
How to purchase Sovereign gold bond online?
Purchasing Sovereign gold bond is really easy. Most of the nationalised and private banks offer purchasing of Sovereign gold bond from their website. Also, famous brokers like Zerodha are offering Sovereign gold bond on their website.
What is the benefit of purchasing Sovereign gold bond online?
If you purchase the Sovereign gold bond online then you get Rs 50 discount on the unit price which is almost 1% discount on the Gold price. So purchasing Sovereign gold bond online is the best way to invest in Sovereign gold bond.
When was the first tranche of Sovereign gold bond scheme launched?
The Sovereign gold bond scheme was launched on 18th January 2016 with a launch price of 2600 per gram of Gold
How to sell sovereign gold bond?
If you want to sell your sovereign gold bond before it matures then you need to sell it on the exchange. You need to have a demat account in order for you to sell your sovereign gold bond. The sovereign gold bond are traded like ETF so you can sell them after 2 weeks of unit allocation.
When is the next tranche of Sovereign gold bond scheme issued in 2021?
Here is the dates for the next tranche of Sovereign gold bond scheme 2021 issue–
|Sr. No.||Tranche||Date of Subscription||Date of Issuance||Price|
|1.||2021-22 Series I||May 17–21, 2021||May 25, 2021||4777|
|2.||2021-22 Series II||May 24–28, 2021||June 01, 2021||4842|
|3.||2021-22 Series III||May 31-June 04, 2021||June 08, 2021||4889|
|4.||2021-22 Series IV||July 12-16, 2021||July 20, 2021||4807|
|5.||2021-22 Series V||August 09-13, 2021||August 17, 2021||4790|
|6.||2021-22 Series VI||August 30-September 03, |
|September 07, |
|7||2021-22 Series VII||October 25 – 29, 2021||November 02, 2021||4765|
|8||2021-22 Series VIII||November 29- December 03, |
December 07, 2021
|9||2021-22 Series IX||January 10-14, 2022||January 18, 2022||4786|
|10||2021-22 Series X||February 28- March 04, 2022||March 08, 2022|
Please note – If you apply for Sovereign gold bond online then you will get additional Rs 50 discount on the listed price.
Sovereign gold bond returns calculator
Use the Sovereign gold bond returns calculator to check how much returns you can expect from your Sovereign gold bond scheme. Please note the Sovereign gold bond returns calculator has 2 parts i.e. interest part and gains part.
Between Gold ETF and Sovereign gold bond which is best?
Sovereign gold bond is the best option as it offers 2.5% interest per year also there are no expenses while purchasing the Sovereign gold bond. The Sovereign gold bond can be traded similar to Gold ETF.
Is Sovereign Gold Bond a good investment?
If you are looking to invest in Gold then Sovereign Gold Bond is the best choice for you as it offers additional 2.5% interest per year on top of the Gold price appreciation(if any). Also there are no expenses charged to the investor for the Sovereign Gold Bond scheme.
What is the benefit of Sovereign Gold Bond?
Here are top 10 benefits of Sovereign gold bond scheme –
1. Sovereign Gold bond can be bought online and this makes its purchase relatively easy.
2. There is no need to worry about safety as it is in a digital form and free from theft.
3. You can earn interest on the Sovereign gold bond, but having physical gold doesn’t offer you interest.
4. This bond is 100% pure and saves you from jewellers that offer impure gold.
5. Gold bond doesn’t charge any expenses.
6. You can also take a loan against the gold bond.
7. Sovereign gold bond can be easily sold in the secondary market after the allotment.
8. Gains from Sovereign gold bond is exempted from capital gains tax when it matures.
9. Sovereign gold bond is transferable so you can gift to your relatives/friends.
10. Sovereign gold bond is the most secure way of purchasing Gold as it is backed by the RBI.
Can I sell Sovereign Gold Bond anytime?
Yes. You can sell your investment in Sovereign Gold Bond anytime(after a fortnight of allocation) in the stock exchanges.
Can you gift Sovereign Gold Bond?
Yes. You can Sovereign Gold Bond to your friends/relatives as long as they meet the eligibility criteria for Sovereign Gold Bond investment.