The Indian Government introduced Sovereign Gold Bonds (SGBs) in 2015 as part of the Gold Monetization Scheme. As part of the scheme, these issues are offered in tranches by the Reserve Bank of India (RBI) after consulting with the government.
The RBI notifies the details of new tranche issuance periodically. Investors of the Sovereign Gold Bond get a Holding Certificate as proof of investment.
SGBs are denominated in grams of gold. It is a substitute for physical gold issued in the form of certificates by the Reserve Bank of India. These bonds are an alternative investment avenue for Indian residents.
If you are planning to invest in this government-backed scheme, you can find the listing of SGBs on stock exchanges. You can also get in touch with a SEBI-authorised agent to buy SGBs. You can make the payment in cash, demand draft, cheque, or via online banking.
The upper limit for SGB subscription is 4 kg for Hindu-Undivided Families and individuals. Meanwhile, trusts and similar organisations can subscribe up to 20 kg per financial year.
If these bonds are co-owned, the limit for investment will remain at 4 kg. However, this upper limit will only apply to the first applicant.
Here is the latest subscription period series list for the Sovereign Gold Bond scheme for 2023-24.
Sr. No. |
Subscription Period |
Tranche |
Date of Issuance |
1. |
September 11-15, 2023 |
2023-24 Series II |
September 20, 2023 |
2. |
June 19-23, 2023 |
2023-24 Series I |
June 27, 2023 |
3. |
March 06-10, 2023 |
2022-23 Series IV |
March 14, 2023 |
4 |
December 19-27, 2022 |
2022-23 Series III |
December 27, 2022 |
The Sovereign Gold Bond interest rate will fetch you a yearly rate of return of 2.50%, as mandated by the Reserve Bank of India. This applies two times a year or semi-annually on its nominal value.
Interest received on these bonds is taxable under provisions of the I-T Act, 1961. However, the tax on capital gains is exempted in the case of redemption of SGB.
Indexation benefits will be provided for long-term capital gains arising to any person on account of transfer of the bond.
Sovereign Gold Bond schemes are one of the safest and most secure debt instruments issued by the Reserve Bank of India. Moreover, the Government of India backs these schemes.
If you are an investor with a low-risk tolerance but are looking for an investment vehicle that offers decent returns, you can invest in SGBs.
Other than this, Sovereign Gold Bonds are an excellent option if you are looking to diversify your investment portfolio. This can help balance your portfolio and serve as a hedge against investments subject to market volatility.
Generally, equity markets and gold tend to have an inverse correlation. Hence, a fall in the equity markets will lead to an increase in the value of gold, which will help you mitigate risk.
These government securities are denominated in grams of gold and issued by the RBI. Once you pay the required issue price, you can buy these bonds. As the market rate of gold increases, the value of SGBs also appreciates.
These bonds are available in several tranches, and you can purchase them in dematerialised or physical forms. You can either buy these bonds from the RBI or the secondary market. Once you purchase a bond, you are assigned an application number, and you get the certificate from the respective bank issued by the RBI.
You can get a number of Sovereign Gold Bond tax benefits during and after the maturity of your investment. The first SGB tax benefit is that there are no TDS deductions on the purchase of SGBs or at the time of encashment.
However, the interest received on SGBs is taxable according to the provisions of the I-T Act. For capital gains, if you withdraw your investments after 8 years, you can avail many SGB tax benefits.
When you do not opt for premature withdrawal, all your capital gains will be exempt from income tax. For long-term capital gains, you get indexation benefits arising to the person on account of the transfer of bonds.
Investors have the option to choose between a flat 10% without considering an indexation rate and 20% with an indexation rate on LTCG.
To purchase the SGB, you must meet some basic eligibility criteria. Here are some of them:
You must be an Indian citizen
You must fall under any of these categories - Associations, individuals, trusts, Hindu United Families, etc., can invest in these gold bonds as long as they are Indian residents.
As per this scheme, you can also purchase SGBs through eligible entities.
Note: You also need to ensure that the bank account details entered are linked with your Demat Account. Failure to do so can result in the transaction being rejected.
The price of the bonds will be fixed in Indian currency based on the average of the closing price of 999 purity gold. These are announced by the India Bullion and Jewellers Association Limited (IBJA) as per the previous 3 days performance before the period of subscription.
The issue price of the bonds will be ₹50 less per gram than the nominal value to investors applying online.
RBI will notify the price and interest on the SGB at the time of issuance. The interest rate is 2.50% p.a., which will be credited to the investor's bank account semi-annually. The final interest amount and the principal will be paid on maturity.
Yes, the bonds can be transferred to anyone who fits the eligibility criteria.
Yes, you may pledge them as collateral when availing loans from banks and NBFCs.
You will receive 2.50% p.a. returns on the nominal value of your SGB.