Sovereign Gold Bond Scheme 2023-24
Sovereign Gold Bond Scheme 2023-24:- Beyond its financial value, gold holds a sacred status for Native Americans. Owning gold no longer carries the same risks or costs associated with waste and fabrication. One such substitute that the Indian government and Reserve Bank of India (RBI) provide is Sovereign Gold Bonds. Gold in “certificate” format is available for purchase here.
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In order to provide investors with an alternative to actual gold, the Indian government launched the Sovereign Gold Bond (SGB) Scheme in November 2015. The demand for real gold has significantly decreased over time, according to market data. SGBs monitor the asset’s export-import value while simultaneously ensuring transparency.
SGBs are regarded as safe government securities. Multiples of grams of gold are used to express its value. SGBs are seen as a viable alternative to actual gold, and their investor base has grown significantly. To acquire an SGB, all you need to do is get in contact with an agent or broker authorized by SEBI. When you redeem the bond, the corpus will be redeemed at the current market value.
Sovereign Gold Bond 2023-24 Series III
| Subscription Period | Date of Issuance | Investment Limit | Interest | Issue Price Per Gram |
| 18 December 2023 – 22 December 2023 | 28 December 2023 | 1 gm to 4 kg | 2.5% per annum | Yet to be announced |
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Sovereign Gold Bond 2023-24 Series IV
| Subscription Period | Date of Issuance | Investment Limit | Interest | Issue Price Per Gram |
| 12 February 2024 – 16 February 2024 | 21 February 2024 | 1 gm to 4 kg | 2.5% per annum | Yet to be announced |
The price history of SGB for FY 2023-24 is as follows:
| Series | Month | Price per Gram |
| Series 1 | June 2023 | Rs. 5,926 |
| Series 2 | September 2023 | Rs. 5,923 |
he price history of SGB for FY 2022-23 is as follows:
| Series | Month | Price per Gram |
| Series 1 | June 2022 | Rs. 5,041 |
| Series 2 | August 2022 | Rs. 5,091 |
| Series 3 | December 2022 | Rs. 5,409 |
| Series 4 | March 2023 | Rs. 5,611 |
The price history of SGB for FY 2021-22 is as follows:
| Series | Month | Price per Gram |
| Series 1 | May 2021 | Rs. 4,777 |
| Series 2 | May 2021 | Rs. 4,842 |
| Series 3 | June 2021 | Rs. 4,889 |
| Series 4 | July 2021 | Rs. 4,807 |
| Series 5 | August 2021 | Rs. 4,790 |
| Series 6 | September 2021 | Rs. 4,732 |
| Series 7 | October 2021 | Rs. 4,765 |
| Series 8 | November 2021 | Rs. 4,791 |
| Series 9 | January 2022 | Rs. 4,786 |
| Series 10 | March 2022 | Rs. 5,109 |
You can think about adding at least 5%–10% of gold to diversify your holdings. It is the ideal investment for those with a limited tolerance for risk because it is low risk. SGBs are quite inexpensive to buy or sell in comparison to actual gold. Comparing the cost of purchasing or selling the SGB to that of actual gold, it is likewise negligible.
SGBs are an option for those who do not want to deal with the inconveniences of physically storing gold. This is because, being in electronic form, it is easier to store in Demat form and cannot be stolen.
Eligibility Criteria
Investments in SGB are open to all Indian residents, including individuals, trusts, HUFs, universities, and charitable organizations. Investing on behalf of a minor is also permitted.
Issuance of Bonds
On behalf of the Central Government, SGBs can only be issued by RBI, and they are exchanged on the Stock Exchange. It is distributed in multiples of one gold gram. For it, investors will get a Holding Certificate. It can be changed to a Demat format as well.
KYC Documentation
The Know-Your-Customer (KYC) regulations apply here just as they do when purchasing physical gold. In order to complete KYC, copies of identification documents—such as a PAN card—and proof of address documents, such as a passport, driver’s license, or voter ID card, must be submitted for verification.
The requirements of the IT Act, of 1961 apply to the taxation of interest on Sovereign Gold Bonds. The capital gains tax that applies to an individual is waived in the event of SGB redemption. Additionally, an investor or the person transferring the bond to another is provided indexation benefits on long-term capital gains.
Eligibility for SLR
Banks have taken responsibility for SLR if they have purchased bonds following the procedures of pledging, hypothecating, or claiming lien. Before extending credit to consumers, a commercial bank must keep capital in the form of gold, cash, and permitted securities, which is known as the Statutory Liquidity Ratio (SLR).
Redemption Price
Based on the average closing price of 999-purity gold over the preceding three working days, the redemption price must be expressed in rupees.
Sales Channel
Bonds are sold by the government via banks, Stock Holding Corporation of India Limited (SHCIL), and a few chosen post offices, depending on the information available. The National Stock Exchange of India and the Bombay Stock Exchange are two reputable stock exchanges where SGBs can be traded directly or through middlemen.
Commission
For the bond distribution, the receiving offices will charge a commission equal to 1% of the total amount of subscriptions. They will give intermediaries (brokers or agents) at least half of this commission.
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Eight years is the sovereign gold bond’s maturity period. You may, however, decide to sell the bond after the fifth year (but only on interest payout days).
The RBI declared on October 27, 2023, that SGBs issued on October 30, 2017, would have an early redemption price of Rs. 6,079 per unit. Once five years have passed since the SGB’s issuance date—which also happens to be the date of interest payment—investors may begin the early redemption process. Hence, on October 30, 2023, investors in SGBs issued on October 30, 2017, may redeem their investments early for Rs. 6,079 per unit.
According to information released by the India Bullion and Jewellers Association Ltd (IBJA), the price for early redemption is established by taking the simple average closing price of gold with 999 purity over the preceding three working days. Based on the simple average closing price of gold for the three business days prior to the redemption date, i.e., October 25–27, 2023, the redemption price for premature redemption of SGBs due on October 30, 2023, is Rs. 6,079 per unit.
The interest rate on your initial investment with SGB is currently 2.50% annually. Until maturity or eight years, it is paid twice a year (semi-annually). Your account, which you shared during investing, will receive a direct credit for interest. The current market price of gold is typically correlated with returns.
The bonds’ value is measured in multiples of gram(s) of gold, with one gram serving as the fundamental unit. An individual or HUF investor may invest as little as one gram of gold at the beginning, with a maximum investment of four kilograms of gold. Investments in up to 20 kg of gold are acceptable for organizations like trusts and colleges.
Applying for a Sovereign Gold Bond can be done directly or through agents through banks, Stock Holding Corporation of India Limited (SHCIL), authorized post offices, and authorized stock exchanges such as the National Stock Exchange of India Limited and the Bombay Stock Exchange.
The websites of the commercial banks allowed to offer SGBs can also be used to purchase them online. Buying SGBs via an online bank website is done in the following manner:
A Sovereign Gold Bond that you bought online via a Demat account will show up in the portfolio upon the SGB’s issuance. When purchasing something offline, a person can pick up the SGB certificate of holding at the issuing bank, designated stock exchanges, post offices, SHCIL offices, or agents. The email address provided in the application form will get a digital copy of the holding certificate from the RBI.
On the day of SGB issuance, the customers will receive the holding certificate. If the recipient has requested to receive the certificate in hard copy, it will be mailed to the email address on file; if not, it will appear in the Demat account on the day the SGB is issued. The holding certificate is also available for customers to pick up from the bank branch.
For SGBs deposited in a lump sum under Section 80C of the Income Tax Act, there are no tax deduction advantages. It is also not tax-free to receive interest on SGB deposits. Under “Income from Other Sources” on tax forms, the interest amount must be disclosed. According to the person’s income tax slab, income tax will be paid. SGBs do not qualify for Tax Deducted at Source (TDS). When kept until maturity, they are, nevertheless, free from capital gains tax.
Absolute Safety
Aside from market concerns, Sovereign Gold Bonds carry none of the hazards connected with actual gold. Here, there are no exorbitant design or waste fees. Furthermore, SGBs yield interest as opposed to real gold, which is a worthless investment.
Extra Income
The most recent fixed rate is available to you; it guarantees an annual interest rate of 2.50% (on the issue price).
When investors transfer bonds that are eligible for indexation benefits, long-term capital gains result. A governmental guarantee is also present for both the principal and the interest accrued.
Tradability
Within a certain time frame, gold sovereign bonds can be traded on stock exchanges (at the issuer’s choice). For example, you can swap them on the National Stock Exchange or the Bombay Stock Exchange, among other exchanges, once your five years of investment are up.
When it comes to loans committed in Demat form, certain banks accept SGB as security or collateral. Because of this, they will fix the loan-to-value (LTV) ratio to the gold value and classify it as a gold loan. Making this determination is the India Bullion and Jewellers Association Limited.
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| Particulars | Physical Gold | Gold ETF | Sovereign Gold Bond |
| Returns/earnings | Lower than the real return on gold due to making charges | More than the actual return on gold | More than actual return on gold |
| Safety | Risk of theft, wear/tear | High | High |
| Purity | The purity of gold always remains a question | High as it is in electronic form | High as it is in electronic form |
| Gains | LTCG after three years | Long-term capital gain post after three years | Tradable on the Stock Exchange |
| As loan collateral | Accepted | Not accepted | Accepted |
| Tradability or exit formalities | Restrictive | Tradable on Stock Exchange | Can be traded and redeemed from the 5th year with the government |
| Storage expenditures | High | Minimal | Minimal |
Q. Are sovereign gold bonds a safe investment?
Ans- In accordance with the Government Security Act of 2006, the RBI issues SGBs on behalf of the national government. Given that the government is backing it, there is very little danger of a repayment default, making it one of the safest investment options.
Q. For sovereign gold bonds, which bank is the best to invest with?
Ans- The designated post offices, nationalized bank branches, scheduled foreign banks, and scheduled private banks are the channels by which the gold bonds are offered for sale. Any bank may be used to invest in SGBs. It is advised that if you have a bank account, you apply for an SGB there.
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