Some of you have asked us about Sovereign Gold Bonds (SGB).
To help, we've compiled key facts on returns, interest, and holding costs in this thread. Let's clear things up!
To help, we've compiled key facts on returns, interest, and holding costs in this thread. Let's clear things up!
SGBs are issued by RBI and are substitutes for holding physical gold. The 1st tranche of SGB issued in 2015 was redeemed in Nov 2023, delivering capital gains of 10.8% p.a.
Can we expect a similar return for the current tranche? It all depends on the gold prices in the future.
Can we expect a similar return for the current tranche? It all depends on the gold prices in the future.
In addition to the capital gains (or losses) from SGBs, the investor would earn interest at 2.5 percent (fixed rate) per annum on the initial investment amount.
This interest will be credited semi-annually to the investor's bank account.
This interest will be credited semi-annually to the investor's bank account.
Interest on SGBs will be taxable as per the applicable slab rate of the investor.
However, capital gains on redemption of the SGB at the time of maturity will be exempt. This and additional interest are big differences in holding gold as SGBs over physical gold or gold ETFs.
However, capital gains on redemption of the SGB at the time of maturity will be exempt. This and additional interest are big differences in holding gold as SGBs over physical gold or gold ETFs.
GST and storage charges for buying and holding physical gold are not applicable for SGBs.
However, SGBs mature after 8 years with 5 years of lock-in. Even in the secondary market, one can buy and sell SGBs, but liquidity is thin.
However, SGBs mature after 8 years with 5 years of lock-in. Even in the secondary market, one can buy and sell SGBs, but liquidity is thin.
Physical SGBs bought through a bank or any intermediary can be converted to a demat form by submitting the dematerialization request to the intermediary. They will upload the data to the e-Kuber portal of RBI to process the request.
You can buy SGBs from bank branches (including online facility), post offices, or through your broker account.
Here's a video explaining what SGBs are and their comparison with other forms of buying gold.
youtu.be
Here's a video explaining what SGBs are and their comparison with other forms of buying gold.
youtu.be
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