Sovereign Gold Bond (SGB) Scheme

About Sovereign Gold Bonds (SGBs):

Sovereign Gold Bonds (SGBs) are the alternative to investment in physical gold. These bonds are risk-free as issued by the Government of India. The Government launched this scheme in 2015 under Gold Monetisation Scheme. These bonds are backed with policies and procedures notified by RBI.  

Features:

• A Person resident in India having PAN can apply for this scheme. Even a resident person subsequently changes the status to non-resident also continues to hold SGB till early redemption/maturity.
• The Bonds are issued in one gram of gold denominations and in multiples thereof. The Minimum investment shall be 1 gram per fiscal year. The Maximum investment is 4 kg for Individual/HUF and 20 kg for others per fiscal year.
• Bonds having a tenor of 8 years but early redemption allowed after 5 years of lock- in period.
• Once bond purchased the certificate of holding will be issued by the RBI. The said holding is credited in the Demat account and can be traded in stock exchanges.
• At the time of redemption price will be decided based on the simple average of the closing price of gold purity 999 of the previous 3 working days published by the India Bullion and Jewelers Association Limited.

Advantage to Invest in SGB:

• Every investor is compensated with fixed Interest at the rate of 2.50 percent payable semiannually directly in the bank account of the investor.
• Bonds are exchange traded fund.
• Bonds are transferable to relatives/friends/others in accordance with the provisions of the Government Securities Act 2006.
• The capital gains tax arising on redemption on the maturity of SGB to “an individual” has been exempted. The indexation benefits will be provided to long terms capital gains arising on the transfer of bonds.
• Joint holding is allowed.
• A minor also can invest.
• Nomination facility is available for the investor.
• Investment in SGB is risk-free. All the risk and cost of storage with holding physical gold are eliminated.
• No TDS will deduct. It’s the responsibility of bond holders to comply with tax laws.
• Partial redemption is allowed in multiples of 1 gram.