Subscriptions to Sovereign Gold Bond Scheme 2023-24 Series III will be open for subscription from December 18–22, 2023 at an issue price of Rs 6,199 per gram of gold.
This price is determined based on the simple average of closing price published by the India Bullion and Jewellers Association Ltd (IBJA) for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e., from December 13-15, 2023. The Reserve Bank of India (RBI) issues SGBs on behalf of the government.
One can buy SGBs either through cash (up to a maximum of Rs 20,000), demand draft, cheque or electronic banking.
For investors applying online, RBI is offering a discount of Rs 50 per gram. “The issue price of the SGBs will be less by Rs 50 per gram for investors who subscribe online and pay through the digital mode. For such investors, the issue price of gold bond will be Rs 6,149 per gram of gold,” RBI said in its release.
The SGBs will be available through various channels, including scheduled commercial banks (SCBs) (except small finance banks, payment banks and regional rural banks), Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, and recognised stock exchanges, such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Individual investors can start with a minimum investment of 1 gm and maximum 4 kg.
The know-your-customer (KYC) documentation for SGBs is the same as that for purchasing physical gold. Permanent Account Number (PAN) issued by the income tax department is mandatory
SGBs offer several advantages over physical gold. It’s a cost-effective way to buy gold as there are no additional charges, such as Goods and Services Tax (GST).
Also, SGBs come with a tenure of eight years with an exit option after the fifth year. SGBs are tax free if held till maturity.
In addition, SGBs offer an annual interest of 2.50 per cent, credited semi-annually to the buyer’s bank account, with the final interest payment made at maturity along with the principal amount. Upon maturity, buyers will receive the value of gold at current market prices, and the interest income, all of which is tax-free.
SGBs can also be used as a collateral for loan. The loan-to-value (LTV) ratio will be as applicable to any ordinary gold loan, mandated by RBI from time to time.
SGBs can also be sold. However, selling them before 36 months may incur short-term capital gains (STCG) tax based on the individual’s income tax bracket. SGBs sold after 36 months will be considered as long-term capital gains (LTCG) and taxed at 20 per cent after indexation.
Investors who had invested in SGB 2017-18 Series XII, (issue date December 18, 2017) can go for premature redemption of their sovereign gold bonds today, i.e., December 18, 2023.
Premature redemption of SGBs are permitted after the fifth year from the date of issue of such gold bond on the date on which interest is payable. “Accordingly, the next due date of premature redemption of the above tranche shall be December 18, 2023,” RBI said in a release.
The redemption price for premature redemption due on December 18, 2023 shall be Rs 6,199 per unit of SGB based on the simple average of closing gold price for three business days, i.e., December 13-15, 2023, the RBI further said.