Important Information About Sovereign Gold Bonds 2023 Before Investing in SGBs

Government securities with a gram of gold par value are known as sovereign gold bonds. They serve as alternatives to owning actual gold. Bonds must be purchased at the issue price, and when they reach maturity, investors may cash them out. The Reserve Bank issuing the bond on behalf of the Indian government.

The Sovereign Gold Bond Scheme 2023-24 – Series II’s most recent tranche opened for subscription on September 11 and will do so until Friday, September 15. One gram of gold costs Rs 5,923 in total.

The issue price of the gold bonds will be Rs 50 per gram cheaper than the nominal value for investors who apply online and pay against the application using digital ways.

Important information regarding Sovereign Gold Bonds

Why should you purchase SGB as opposed to actual gold? What advantages are there?

Since investors get the current market price at the time of redemption or early redemption, the amount of gold they paid for is safeguarded. The SGB is a better option than keeping gold in physical form. Storage-related dangers and expenses are removed.

The market value of gold at the time of maturity and monthly interest are guaranteed to investors. When it comes to concerns like purity and manufacturing fees, SGB is free in the case of gold jewelry. The danger of scrip loss is eliminated since the bonds are kept on the records of the RBI or in demat form.

Investing in SGBs entails any risks?

If the market price of gold falls, there may be a chance of capital loss. The investor does not, however, lose any of the gold units he purchased.

Who is permitted to make investments in SGBs?

Investors in SGB must be Indian citizens as specified by the Foreign Exchange Management Act, 1999. Individuals, HUFs, trusts, colleges, and nonprofit organizations are all examples of eligible investors.

Individual investors may keep SGB until early redemption or maturity even after changing their residence status from resident to non-resident.

What is the investment minimum and maximum?

The bonds are offered in multiples of one gram of gold and at that amount.

The Bond has a one-gram minimum investment requirement and a maximum subscription limit of four kilograms for individuals, four kilograms for Hindu Undivided Families (HUF), and twenty kilograms for trusts and other similar organizations as may from time to time be published by the government every fiscal year (April-March).

The first application is subject to the cap in a joint ownership situation. The yearly limit will apply to both secondary market purchases of bonds and bonds that were subscribed for under various tranches during the government’s original issue. The assets used as collateral by banks and other financial institutions will not be included in the investment cap.

How will interest be paid? What is the interest rate?

The bonds pay interest at a fixed rate of 2.50% annually on the amount of the original investment. The investor’s bank account will get interest credits twice a year, and the last interest payment will be due at maturity along with the principal.

What price are the bonds sold for?

The nominal value of gold bonds is set in Indian Rupees based on the simple average of the closing price of 999-purity gold for the last three business days of the week before to the subscription period, as announced by the India Bullion and Jewelers Association Limited.

What companies are authorized to sell SGBs?

Bonds are offered directly or via their representatives through the authorized stock exchanges, Nationalized Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Offices, and Stock Holding Corporation of India Ltd. (SHCIL).

Applying online is possible.

Yes. Through the websites of the following scheduled commercial banks, customers may submit applications online. For investors who apply online and pay the application fee in digital form, the issue price of the gold bonds would be Rs 50 per gram less than the nominal value.

Is the bond subject to tax deducted at source (TDS)?

On the bond, TDS is not applicable. However, it is the bond holder’s duty to abide with the tax regulations.