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Home >Money >Personal Finance >SBI cites 6 big reasons to invest in Sovereign Gold Bonds

The latest tranche of sovereign gold bonds (SGB) will open for subscription tomorrow (1 March). Investors can invest in SGBs through their Demat accounts or via online banking. The country's top lender State Bank of India (SBI) provide the option of buying SGBs online. In a tweet, SBI said, "Get returns and safety together! 6 golden reasons to invest in Sovereign Gold Bonds. SBI customers can directly invest in INB under e-services."

Here is why you should invest in Sovereign gold bonds:

1) Assured returns of 2.5% p.a. payable half-yearly

The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.

2) No storage hassles like physical gold

Unlike physical gold, there is no issue of storage when it comes to invest in SGBs, hence they are more secure.

3) Liquidity

Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

4) No GST and making charges

There is no goods and services tax (GST) levied on sovereign gold bonds, unlike gold coins and bars. When you buy digital gold, you need to pay 3% of GST just like in case of buying physical gold. Also, there are no making charges on SGBs

5) Can be used as collaterals for loans

Sovereign gold bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the Reserve Bank of India (RBI) from time to time. The lien on the bond shall be marked in the depository by the authorised banks.

6) No Capital Gain Tax on redemption

Sovereign Gold Bond Scheme was launched by the government in November 2015, under Gold Monetisation Scheme. Under the scheme, the issues are made open for subscription in tranches by RBI.

The issue price for Sovereign Gold Bonds 2020-21 (Series XII) has been fixed at 4,662 per gram, the Finance Ministry has said. "The Government of India in consultation with the Reserve Bank of India has decided to allow a discount of 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be 4,612 per gram of gold," the statement added.

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