Sovereign Gold Bond: Five reasons to buy SGB series-II that closes for subscription today

Sovereign Gold Bonds (SGBs) offer assured returns, no storage hassles, no capital gains tax, can be used as collaterals for loans, and have no GST or making charges

Sangeeta Ojha
Updated15 Sep 2023, 07:18 AM IST
Sovereign Gold Bond: No goods and services tax (GST) is levied on sovereign gold bonds.
Sovereign Gold Bond: No goods and services tax (GST) is levied on sovereign gold bonds.

Sovereign Gold Bonds (SGBs) are an attractive investment option for people willing to invest in gold. SGB Series-II 2023-24 is open for subscription until September 15, 2023. The price of these gold bonds has been fixed at 5,923 per gram.

SGB: Discount for online buyers

The government, in consultation with the RBI, has decided to offer a discount of 50 per gram less than the nominal value to investors applying online and making the payment against the application through digital mode.

For such investors, the issue price of gold bond will be 5,873 per gram.

SGB is ideal for these investors

“The latest Sovereign Gold Bonds Series II fixed at 5873/gm, a 3 discount from previous tranches, will be ideal for investors willing to hold on to their investment for at least 5 years. Gold has historically served as a hedge against inflation and volatility. During the last year, the yellow metal has given a return of 13-15 percent. It has given a 12 percent return in dollars. Moving forward, gold prices may rise due to festive demand in India, so investors opting for SGBs should have a long-term investment horizon to maximize their benefits," said Nish Bhatt, Founder & CEO, Millwood Kane International.

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 

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

3) No Capital Gain Tax on redemption

The government launched the Sovereign Gold Bond Scheme in November 2015 under the Gold Monetisation Scheme. Under the scheme, RBI makes the issues open for subscription in tranches.

4) 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.

5) No GST and making charges

No goods and services tax (GST) is levied on sovereign gold bonds, unlike gold coins and bars. Also, there are no making charges on SGBs

 

The bonds will be sold through banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices, and recognised stock exchanges -- the NSE and the BSE.

 

 

 

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First Published:15 Sep 2023, 07:18 AM IST
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