New Sovereign Gold Bonds Launched: Know how to invest

The Centre has introduced the third series of Sovereign Gold Bonds (SGBs), offering a lucrative alternative to traditional physical gold investments for the financial year 2023-24. The subscription period for Sovereign Gold Bond Series 2023-24 Series III commenced on December 18 and will conclude on December 22, 2023, with the issuance date set for December 28, 2023.

This marks the third tranche of Sovereign Gold Bonds for the fiscal year 2023-24, following the first series launched in June 2023 and the second in September 2023. Investors can anticipate the SGB Series 2023-24 Series IV subscription to be open from February 12 to February 16, 2024, with the issuance date scheduled for February 21, 2024.

Key Features of Sovereign Gold Bonds:

1. Denomination and Tenor:

   • SGBs are denominated in grams of gold multiples, with the fundamental unit being one gram.
   • The tenor of the SGB is eight years, and investors have the option for premature redemption after the fifth year.

2. Pricing Mechanism:

   • The nominal value of the bond is determined based on the simple average of the closing price for gold of 999 purity in the last three working days preceding the subscription period.

3. Tax Advantages:

   • SGBs offer a unique tax advantage compared to other forms of gold. The interest on SGBs is taxable under the Income Tax Act of 1961. However, if held until maturity (8 years), the final amount is exempted from taxation.
   • SGBs provide an interest rate of 2.5% per annum, payable semi-annually, taxable according to the investor’s tax slab. TDS is not applicable.

4. Return on Investment:

   • SGBs have demonstrated competitive returns, with the SGB 2015-16 Series I boasting a return on maturity of 12.9%, outperforming other gold investments like physical gold and gold ETFs.

5. Where to Buy:

   • SGBs are available through Scheduled Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges (National Stock Exchange of India Limited and Bombay Stock Exchange Limited).

6. Investment Limits:

   • Resident individuals, HUFs, Trusts, Universities, and Charitable Institutions are eligible to invest.
   • The maximum subscription limits for each fiscal year are 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts and similar entities.

Expert Opinions:

• Abhijit Roy, CEO, GoldenPi, emphasizes the tax efficiency of SGBs compared to physical gold, offering potential capital appreciation.
• Suresh Surana, Founder of RSM India, highlights the taxation of gains from SGBs and the benefits of long-term holding.
• Colin Shah, MD, Kama Jewelry, underscores the numerous advantages of SGBs, including hassle-free storage, fixed annual interest, and exemption from capital gains tax.

Sovereign Gold Bonds emerge as an attractive investment avenue, combining the appeal of gold with unique tax advantages. Investors are encouraged to explore this government-backed investment, providing security, tradability on stock exchanges, and exemption from capital gains tax. The ongoing series presents an opportunity for individuals and entities to diversify their investment portfolio with a stable and potentially rewarding asset.