Sovereign gold bond opens for subscription: Issue price, discount in 10 points
Sovereign gold bonds(SGB 2022-2023): Capital gains, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds
PremiumThe first tranche of Sovereign Gold Bond or SGB scheme for the current fiscal opened for subscription today. The issue price has been fixed at ₹5,091 per gram of gold. The Sovereign Gold Bond Scheme 2022-23 - Series I will remain open till June 24, 2022. Investors who apply online and make payment online get a discount of ₹50 per gram. For such investors, the issue price will be ₹5,041 per gram. The date of issuance will be June 28, 2022. In the futures market, gold prices were trading slightly higher at ₹50866 per 10 gram.
The second tranche (2022-23 Series II) will be available for subscription during August 22-26, 2022.
Here are 10 things to know about Sovereign Gold Bond Scheme
1) The sovereign gold bonds mature in eight years, with an option of premature redemption after fifth year.
2) Investors are paid a fixed rate of interest of 2.5% per annum payable semi-annually on the nominal value.
3) Minimum permissible investment is one gram of gold. The RBI issues the bonds on behalf of the Government of India.
4) The Sovereign Gold Bond Scheme was launched in 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings - used for the purchase of gold - into financial savings.
5) During 2021-22 and 2020-21, the two COVID-impacted financial years, investors bought the bonds for an aggregate amount of ₹29,040 crore.
6) “Investment in non-physical gold, digital gold eliminates storage costs. Also, an investment in SGBs comes with an interest coupon payable semi-annually," said Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm.
7) "After touching a high in the month of April, gold prices have cooled off due to the rally in the US Dollar. A higher US dollar makes it expensive to own gold. An expectation of a further rise in inflation, interest rates, and yields across the globe will restrict much of the gains for gold. Traditionally, gold prices tend to rise during uncertain times. The escalation in the geopolitical tensions in Russia-Ukraine, new variants of the virus may push gold prices upwards," he added.
8) These bonds are traded on exchanges, offering another route of redemption but liquidity is typically low.
9) Capital gains on gold bonds, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds.
10) But secondary sale and interest gained from sovereign gold bond comes under the income tax net. SGB can be used as a collateral in taking loans from the banks.
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