The Government of India, in association with the Reserve Bank of India (RBI), is set to issue Sovereign Gold Bonds (SGBs) in two series for the fiscal year 2023-24.
The Series III and Series IV bonds are scheduled for subscription on December 18-22, 2023, and February 12-16, 2024, respectively, with issuance dates on December 28, 2023, and February 21, 2024.
Key Points to Consider Before Investing in SGBs:
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Eligibility for Subscription: Sovereign Gold Bonds (SGBs) are available for resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.
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Denomination and Limits: Issued in units of one gram of gold. Minimum investment is one gram, with a maximum limit of 4 kg for individuals and HUFs, and 20 kg for trusts and similar entities per fiscal year.
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Pricing Mechanism: The price of SGBs is based on the average closing price of 999 purity gold, as stated by the India Bullion and Jewellers Association Limited (IBJA), calculated from the last three working days preceding the subscription period. Online subscribers paying digitally receive a ₹50 discount per gram.
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Issuance and Interest Rate: Issued as Government of India Stock under the Government Securities Act, 2006. They offer a 2.50 percent annual interest, payable every six months.
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Loan Collateral: SGBs can be used as collateral for loans, offering investors additional financial flexibility.
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Redemption Price: Determined by the average closing price of 999 purity gold of the previous three working days as published by IBJA Ltd.
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Tradability and SLR Eligibility: SGBs are tradable on exchanges and count towards Statutory Liquidity Ratio (SLR) requirements.
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Tax Treatment: Interest on SGBs is taxable per the Income Tax Act, 1961. Capital gains tax is exempt for individuals upon redemption.
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Investment Alternative: Aimed at offering a secure and beneficial alternative to physical gold, providing added advantages and investor flexibility.
