June 19, 2024

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A Brief on Sovereign Gold Bonds Scheme and its Advantages

4 min read
Sovereign Gold Bonds Scheme

Sovereign Gold Bonds Scheme

Sovereign Gold Bonds are highly demanded government securities that are denominated in grams of gold. SGBs are the best substitutes for physical gold. so People who invest in gold and stay worried about its safety, storage, and returns can choose to buy Sovereign Gold Bonds.
The important thing to learn here is that investors need to pay the issue price of Sovereign Gold Bonds in cash. Another thing to note is that bonds upon maturity are redeemed in cash. The Sovereign Gold Bonds scheme is issued by the Reserve Bank of India on behalf of the Government of India.

Quick Facts

  1. The minimum investment allowed in Sovereign Gold Bonds is equal to one gram of gold.
  2. The maximum investment allowed to any individual and Hindu Undivided Family is up to a value of 4 kg.
  3. The maximum investment limit allowed for trusts and other similar entities are 20 kg.
  4. The maturity period in the case of Sovereign Gold Bonds is of 8 years.
  5. The earned interest from SGB under the Income Tax Act, 1961 attracts tax.

Why Choose Sovereign Gold Bonds (SGB)?

Choosing to invest in the Sovereign Gold Bonds scheme brings to you many benefits. The great features and advantages make it one of the highly sought products in the investment category. People prefer making investments considering their personal investing capacity and earning returns accordingly.
The fixed interest paid irrespective of market condition is the key attraction for investors investing in Sovereign Gold Bonds in India. SGB is to offer a fixed annual interest rate of 2.5 percent along with the benefit of gold price movement. There is an extra discount of Rs.50 per gram for you so if you buy Sovereign Gold Bonds (SGB) online and pay digitally. It is an added advantage for gold bond investors. so The RBI, the central bank, on behalf of the government, issues Sovereign Gold Bonds falling in the category of government securities.

Sovereign Gold Bond

Key Intake

  1. • (SGB) Scheme is the best alternative to physical gold.
  2. • It does not need safety, security, and secure space for storage like gold in its physical form.
  3. • SGB is one of the dependable investment avenues for retail and institutional investors.
  4. • Sovereign Gold Bonds (SGB) are the perfect option for risk-averse investors.
  5. • SGB can be buy by Indian individual residents, trusts, Hindu Undivided Families (HUFs), universities, and other charitable organizations.
  6. • You also get the benefit of gold price movement in the market.

How is the Sovereign Gold Bond Tax Calculate?

The Sovereign Gold Bonds help you earn an annual interest of 2.5 percent every year. This earned interest is subject to tax under the Income Tax Act, 1961. You do not have the liability of TDS in the case of SGB. Sovereign Gold Bonds so if redeem after the 5 years lock-in period but before the 8 years maturity period will consider long-term capital gains and will attract 20% tax with an indexation benefit.

What is the maturity period for Sovereign Gold Bonds?

The Sovereign Gold Bonds have a fixed maturity period of 8 years. The early exit is subject to taxation but the return on maturity is free from tax. The tax exemption has nothing to do with the fact whether you have purchased the Sovereign Gold Bond from the primary market or secondary market. This tax exemption is given purposely with the objective to encourage a greater number of investors from the retail segment.

When to sell Sovereign Gold Bonds Scheme?

Sovereign Gold Bond Scheme list on a stock exchange, so it can be traded from the RBI, notified date. so If the gold bond is sold within 3 years from the date of purchase, the return received will be treated as short-term capital gains. but It will be added to the annual income of the bondholder and will be taxed as per the applicable tax slab. On the other hand, if the gold bond is sold after completion of 3 years from the date of purchase and the returns received will be treated as long-term capital gains. so It will be taxed at the rate of 20% with added cess and indexation benefits.
Are there any risks in SGBs and is join holding allowed?
There can be a risk of capital loss if the market price of gold declines. Yes, joining holding in

Sovereign Gold Bond Scheme permit.

I have more members in my family. Can my other family member make an investment equivalent to 4 kg of gold in their own name?
A family having a greater number of interested members allow buying Sovereign Gold Bonds equivalent to 4 kg of gold in their own name subject to the satisfactory fulfillment of the predefined eligibility criteria.
The investment in Sovereign Gold Bonds schemes helps you take advantage of fixed annual interest and Buying sovereign gold bonds is no more a daunting task. There are many ways to buy sovereign gold bonds and one such way is online in the secondary market.

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