Sovereign Gold Bond (SGB)
Say goodbye to the hassles of physical gold Investment and hello to a better way to invest in gold
Sovereign Gold Bond Scheme 2023-24
Kotak Securities
•04m 03s
How to Invest In Sovereign Gold Bond?
Kotak Securities
•01m 14s
Sovereign Gold Bond: Right way to invest in gold?
Kotak Securities
•01m 41s
Returns
Higher real returns viz-a-viz then prevailing prices of Gold
Lower real returns on resale compared to then prevailing price of Gold
Exit Route
Tradeable on exchanges; Redemption with GoI after 5th year onwards
Resalable/Exit route only through authorised jewellers or known persons
Capital Gain
Long-term Capital Gain tax applicable after 3 years. No Capital Gain tax if held till maturity
Long-term Capital Gain tax applicable after 3 years
SOVEREIGN GOLD BOND | PHYSICAL GOLD | |
|---|---|---|
Returns | Higher real returns viz-a-viz then prevailing prices of Gold | Lower real returns on resale compared to then prevailing price of Gold |
Security | No such fear. Highly secured investment | Fear of loss while handling/ storing |
Purity | No question on purity, as Gold is in digital form | Always questionable |
Storage Cost | Minimal storage cost | High on account of lockers/ private security |
Exit Route | Tradeable on exchanges; Redemption with GoI after 5th year onwards | Resalable/Exit route only through authorised jewellers or known persons |
Capital Gain | Long-term Capital Gain tax applicable after 3 years. No Capital Gain tax if held till maturity | Long-term Capital Gain tax applicable after 3 years |
Collateral utility | Can be used for mortgage loans | Can be used for mortgage loans |
Source- RBI
We believe in quality first and a technology-led approach that makes us a reputable choice for investment advisors across the industry.
Still have questions?
What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs (Sovereign Gold Bonds) are issued by the Reserve Bank of India on behalf of the government of India. SGBs are government securities whose denomination is in grams of gold. SGBs are a substitute for holding physical gold. Investors pay the issue price in cash and the bonds are redeemed in cash upon maturity.
Why should I buy SGB rather than physical gold? What are the benefits?
Here are some of the many benefits of investing in Sovereign Gold Bonds (SGBs):
- The quantity of gold bought remains protected as you get the current market price at the time of redemption/premature redemption
- The risks and costs of holding gold in physical form are eliminated
- Additionally, you get periodic interest when you invest in SGBs
- Unlike physical gold, there are no concerns with the purity of the gold as they are held in bonds
- SGBs are held in dematerialized form with the Reserve Bank of India. This eliminates the risk of loss or theft
What is the rate of interest and how will the interest be paid?
The bonds bear an interest at the rate of 2.50 percent (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.
Who is eligible to invest in the SGBs?
People who are residents of India as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGBs.
Eligible investors include:
- Individuals
- HUFs (Hindu Undivided Family)
- Trusts
- Universities
- Charitable Institutions
Individual investors whose residential status changes from resident to non-resident may continue to hold SGBs till early redemption/maturity.
What is the minimum and maximum limit for investment?
The Bonds are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in SGBs shall be one gram. The maximum limit of subscription depends on the category of investor and are as follows:
- 4 Kgs for an individual
- 4 Kgs for a Hindu Undivided Family (HUF)
- 20 Kgs for trusts and similar entities notified by the government from time to time per fiscal year (April – March).
In the 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 the 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
Can each member of my family buy 4Kg in their own name?
Yes, each family member can buy the bonds in his/her own name if they satisfy the eligibility criteria:
People who are residents of India as defined under the Foreign Exchange Management Act, 1999 are eligible to invest in SGBs.
Eligible investors include:
- Individuals
- HUFs (Hindu Undivided Family)
- Trusts
- Universities
- Charitable Institutions
Individual investors whose residential status changes from resident to non-resident may continue to hold SGBs till early redemption/maturity.
If I apply, am I assured of allotment?
If you meet the eligibility criteria and submit the application successfully online, you will be allotted shares.
At what price the bonds are sold?
The nominal value of Gold Bonds shall be in Indian Rupees fixed 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.