Sovereign Gold Bond Scheme

Sovereign Gold Bond

One of the most well-known programmes, the Sovereign Gold Bond Program, was introduced by the government in November 2015 as part of the Gold Monetization Program. The Reserve Bank of India, in cooperation with the Government of India, opens the issues for subscription in tranches under the Government’s recently implemented programme. The RBI has the authority to maintain, disseminate, and occasionally modify the rules. According to the calendar below, you can subscribe to the sovereign gold bond. Before each new tranche, RBI will announce the rate of the circulation plan by making a press release.

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Sovereign Gold Bond Scheme- Features

Here are the sovereign gold bond scheme features-

• The bonds will only be sold to resident Indian entities, such as individuals (acting alone, jointly with another individual, or on behalf of a young child), HUFs, Trusts, universities, and charitable organisations.
• One gramme of gold will be the smallest investment that is allowed.
• The maximum amount that may be subscribed for each fiscal year (April through March), as announced from time to time by the Government, should be 4 kg for an individual, 4 kg for HUF, and 20 kg for trusts and other similar companies. We’ll get a self-declaration to that effect. The annual ceiling will encompass both bonds purchased on the secondary market and those subscribed for under various tranches during the government’s first issuance.
• The investment cap of 4 kg will only be applied to the first applicant in a joint holding situation.
• The bond will have an 8-year tenor with three exit options that can be utilised on interest payment dates in the fifth, sixth, and seventh years.
• The nominal value will be paid to investors at a fixed rate of 2.50 percent per year, payable every six months.
• Investors are required to supply bank account information in order to make interest and maturity value payments.
• According to the provisions of the Income Tax Act of 1961, the interest on gold bonds would be taxed (43 of 1961). The capital gains tax that would have been due upon repurchasing SGB by an individual has been waived. Long-term capital gains from the transfer of bonds will be eligible for indexation advantages.
• Within a fortnight of the issuance, bonds will be tradable on stock markets on a date that the RBI will announce.

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Sovereign Gold Bond Scheme- Eligibility

Here are the sovereign gold bond scheme eligibility criteria-

If you are, you may submit an application for Sovereign Gold Bonds.

• Residential Person or Individual
• Resident Individual on behalf of a Minor
• Undivided Hindu Family
• Trusts, colleges, and charitable organisations
• Required PAN Number provided by the Income Tax Department

Sovereign Gold Bond Scheme- Benefits

Here are the sovereign gold bond scheme benefits-

1. Purchase flexibility: Select the amounts that are most convenient for you to invest in! offering investments starting at 1 grammes and going up to 4 kilogramme for private investors and 20 kg for trusts and other organisations. Both online and through any Axis Bank branch, you can invest in sovereign gold bonds. Additionally, digital investors receive a discount. 50 cents for each gramme you buy.
2. Chance for asset appreciation: On your annual investment, earn interest at the 2.5% indicated by the RBI.
3. Operational simplicity: Sovereign Gold Bonds, which are accounted for and secured by the RBI, let you easily invest in gold without worrying about having physical gold on hand. Users hold the investments in demat form, and they have the option to redeem them at any time, including before maturity.
4. Benefits of early redemption and maturity: You have the option of withdrawing your investment in SGBs before the conclusion of the fifth, sixth, or seventh year of investment. This withdrawal will be based on the gold price in effect at the time of the withdrawal. As an alternative, you could decide to lock in your investment for the full 8 years to maximise your return and avoid paying capital gains tax. safer and more secure than carrying actual gold.
5. If held until maturity, capital gains tax is exempt.
6. Through any Axis Bank Branch, you can invest in SBG.

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Who can invest in Sovereign Gold Bond?

Sovereign Gold Bonds are among the most profitable investment schemes in the market due to their varied benefits and lesser restrictions. The investors who have a low risk-appetite but would want a substantial return on their investment can opt for Sovereign Gold Bond Schemes. The bonds are one of the highest returns bearing schemes which are mandated by the Indian government.

Apart from this, the people who are looking to diversify their investment portfolio can opt for these bonds which make up for the investments which are subjected to high market risks. In case there is a fall in the equities market, the value of gold will increase which will help compensate for the overall risk involved in the entire investment portfolio.

Sovereign Gold Bond- FAQs

1. After five years, is SGB still taxable?

Answer-According to a news article in the Economic Times, if the SGB is redeemed after the lock-in period of 5 years but before the maturity period of 8 years, long-term capital gains will be taxed at 20% with an indexation benefit.

2. Which is preferable, gold or gold bonds?

Answer-Gold bonds can be kept in certificate or demat form and offer higher returns than real gold (gains plus an additional 2.75% fixed interest per year), all at a lower cost. Its lack of liquidity is their one significant flaw. Only the fifth year can be left after.

3. Are sovereign gold bonds preferable than FDs?

Answer-It can be difficult to decide because both choices provide excellent yields and little risk. FD returns are often lower than those from SGBs, but they promise more safety than SGBs. Each scheme operates differently. Your choice is based on your financial objectives and risk tolerance.

4. Can I get my SGB back before five years?

Answer-SGBs have an eight-year maturity term, however early withdrawal is permitted after the sixth.

5. What occurs when SGB reaches maturity?

Answer-The maturity amount of the Sovereign Gold Bond (SGB) is credited to the bank account associated with the Zerodha demat account at maturity. Indian Rupees will be used to redeem the gold bonds.