Subscriptions to Sovereign Gold Bond Scheme 2023-24 Series II will remain open from September 11-15, 2023, the Reserve Bank of India (RBI) announced on September 9, 2023.
The issue price has been fixed at Rs 5,923 per gram of gold, the RBI said. This price is determined based on the simple average of closing price published by the India Bullion and Jewelers Association Ltd (IBJA) for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e., from September 6-8, 2023. RBI issues SGBs on behalf of the government.
For investors applying online, RBI is offering a discount of Rs 50 per gram. “For such investors, the issue price of Gold Bond will be Rs 5,873 per gram of gold,” RBI said in its release.
These bonds will be available through various channels, including scheduled commercial banks (SCBs), Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, and recognized 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.
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, the bond has a tenure of eight years with an exit option after the fifth year.
Investors will earn an annual interest of 2.50 per cent, credited semi-annually to their bank account, with the final interest payment made at maturity along with the principal amount. Upon maturity, they will receive the value of gold at current market prices, and the interest income, and all of which is tax-free.
SGBs can also be sold. However, selling them before 36 months may incur short-term capital gains (STCG) tax based on your 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.
RBI also announced the dates for premature redemption of the SGB 2016-17 Series IV issue. They will be allowed for premature redemption starting from September 16, 2023.
RBI had already announced that the opportunity to prematurely redeem these bonds will start after the fifth year, coinciding with the interest payment date. The redemption price has been set at Rs 5,929 per unit of SGB, RBI said in a release.
“Accordingly, the redemption price for premature redemption due on September 16, 2023 (September 17, 2023 being Sunday) shall be Rs 5,929 per unit of SGB based on the simple average of closing gold price for the week September 4-8, 2023,” RBI further said.