The bond has an 8-year term with a 5-year exit option that can be activated on the interest payment date.
Individuals and HUF have a maximum subscription limit of 4 kg, whereas trusts, universities, and charitable institutions have a maximum subscription limit of 20 kg.
Is it possible to purchase a sovereign gold bond through HDFC?
Customers of HDFC Bank can invest in government-issued sovereign gold bonds through NetBanking and their DEMAT account and receive a discount of Rs. 50 per gram.
Customers of HDFC Bank can invest in government-issued Sovereign Gold Bonds, which will be available for purchase from March 1, 2021, until March 5, 2021. At a fixed interest rate of 2.5 percent, the issue price has been set at Rs 4,662 per gram. With the issue price of Rs 4612 per gram, applicants can save Rs 50 per gram on digital applications. This is in keeping with the Government of India’s decision, made in cooperation with the Reserve Bank of India, to provide a discount of Rs 50 per gram to investors who apply for sovereign gold bonds online and make payments digitally.
Sovereign Gold Bonds are government securities denominated in grams of gold that are issued by the Reserve Bank of India (RBI) on behalf of the government. As a result, this paper form of gold can be used as a substitute for genuine gold.
The ‘paper gold’ or gold bonds are sold in multiples of one gram of gold, hence the minimum investment is one gram of the precious metal. In other words, the smallest amount of gold that can be invested is one gram.
When purchasing bonds, investors must pay the issue price in cash, which is redeemed in cash at maturity. Gold bonds can be exchanged on the stock exchange, and the profits are tax-free. They can also be used as loan collateral. The interest on the Bonds will be taxable under the Income Tax Act of 1961. (43 of 1961). On maturity, capital gains tax on SGB redemptions to individuals has been eliminated.
The current series of sovereign gold bonds, which were first issued in 2015, is the 12th tranche for fiscal year 2020-21. Subject to investment limits, the subscription is open to residents, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions.
The gold bonds are available for purchase at specified post offices, the Bombay Stock Exchange, the National Stock Exchange, and the Stock Holding Corporation, as well as designated banks such as HDFC Bank.
Individuals and HUFs are allowed to purchase up to 4 kg every financial year, but trusts and similar corporations are limited to 20 kg. If a joint holding application is submitted, the investment limit of 4 kg will be applied to the first applicant.
The bond has an eight-year term with an option to depart after the fifth year, which a bond holder can exercise on the following interest payment date.
Please note that through Netbanking, only people can apply for Sovereign Gold Bonds.
A sovereign gold bond is a secure investment because it is issued by the Indian government and hence backed by the government of India. It is also a straightforward investment because it may be completed online, resulting in a lesser rate. Aside from that, there are a number of reasons why gold bonds are a better option than real gold.
Second, its prices are connected to the India Bullion and Jewellers Association’s pricing of 999 quality (24k) gold (IBJA). When gold prices rise, investors can readily sell their gold bonds on the secondary market since they are liquid.
Third, the investor receives a fixed interest rate (2.5 percent for the current series), comparable to that of a bank’s fixed deposit. Gold Bonds earn a set interest rate that is unaffected by capital appreciation.
Fourth, the gold bond’s keeping cost is small when compared to the security cost of possessing actual gold in the form of jewelry, bars, coins, or ingots.
Fifth, at maturity, private investors are exempt from paying capital gains tax or TDS.
The price of gold is on the decline. For example, when the current series was announced on January 29, 2021, the RBI set the issue price at Rs 4912 per gram, in line with gold pricing at the time. However, prices fell roughly 6.3 percent over the next 30 days, resulting in a readjustment at Rs 4662 per gram.
Buying now implies you’ll acquire a gold equivalent at a lower price, and you’ll be able to wait for prices to climb again. “Gold’s long-term prospects remain intact,” says G Chokkalingam, founder and chief investment officer of Equinomics Research.
Customers with an HDFC Bank NetBanking or Demat account can invest in government-issued sovereign gold bonds and receive a Rs50/- discount per gram.
To begin, go into your NetBanking account and select the ‘Offers’ option. You can also go to an HDFC Bank branch near you.
*There are certain restrictions. The information in this article is generic in nature and is offered solely for educational purposes. It is not a substitute for personalized advice tailored to your individual situation.
What is the best way to buy gold Bonds online?
Customers can apply online at one of the mentioned scheduled commercial banks’ websites. The issuance price of the Gold Bonds will be $50 per gram less than the nominal value for those investors who apply online and pay for their application via digital mode.
What exactly is the HDFC Sovereign Gold Bond?
Because they are issued by the Indian government, HDFC Sovereign Gold Bonds are one of the safest ways to invest in gold. Aside from not having to pay Tax Deducted at Source (TDS), investing in HDFC’s SGBs earns you a fixed interest rate of 2.5 percent per year. You don’t even need actual lockers to keep them.
Which bank is the most suitable for Sovereign gold bonds?
Sovereign Gold Bonds (SGBs) are a great way to invest in gold without having to buy it. You can benefit from capital appreciation as well as annual interest with these bonds. These bonds, which were issued by the Indian government, also reduce a number of the hazards connected with actual gold. These bonds can be purchased via ICICI Bank’s internet banking or the iMobile application.
Does SGB require a demat account?
Yes, a demat account is not required to purchase a sovereign gold bond. If you have a demat account, you should acquire your SGB holdings in demat format so you can trade them on the exchange.
What is the 2021 Gold Bond Scheme?
Series VIII’s issue price was Rs 4,791 per gram, and it was available for subscription from November 29 to December 3 last year.
The bond’s price is determined in Indian rupees using a simple average of the closing price of 999-purity gold published by the India Bullion and Jewellers Association (IBJA) for the last three working days of the week prior to the subscription period.
The bonds are denominated in gram(s) of gold multiples, with one gram as the fundamental unit. The bond will have an eight-year tenor, with an exit option after the fifth year that can be utilized on the next interest payment dates.
The minimal investment is one gram of gold, with a maximum subscription limit of four kilograms for individuals, four kilograms for HUFs, and twenty kilograms for trusts and similar companies per financial year (April-March).
The sovereign gold bond plan was introduced in November 2015 with the goal of reducing physical gold demand and shifting a portion of domestic savings formerly used to buy gold to financial savings.
Nish Bhatt, Founder and CEO of Millwood Kane International, commented on the sovereign gold bond plan, saying, “SGB is a cost-effective approach for investors to gain exposure to gold. There are no storage fees or taxes, like there are when purchasing actual gold. Paper gold has a higher redemption value and is more easily redeemed for loans. The SGB comes with a 2.5 percent coupon and a tax benefit for investors.”
He went on to say that the scheme has been a major success for the government, with over Rs 32,000 crores raised since its launch in 2015.
“Gold prices are currently trading near a two-month low. Gold prices are around Rs 9000/10 gm lower than they were in 2020. “The decline is primarily attributable to the US Federal Reserve’s minutes, which showed a faster rate hike and a drop in bond buying than previously projected,” Bhatt said in a statement.
The rate at which global central banks unwind their monetary positions, as well as the movement of the US dollar, will dictate gold prices in 2022, he said.
Denomination/Value
The bonds are valued in gram(s) of gold multiples, with 1 gram serving as the base unit. The minimal initial investment is one gram of gold, with a maximum investment of four kilograms of gold per investor (individual and HUF). 20 kg of gold are authorized for trusts and universities.
Interest Rate
On your original investment, the current interest rate for SGB is 2.50 percent per year. It is paid on a bi-annual basis (semi-annually). The current market price of gold is frequently used to calculate returns.
Issuance of Bonds
SGBs are issued by the Reserve Bank of India on behalf of the Central Government and are traded on the Stock Exchange. It’s only available in one-gram increments. It will be accompanied by a Holding Certificate for investors. It’s also possible to convert it to Demat form.
KYC Documentation
When buying real gold, you must follow the same Know-Your-Customer (KYC) guidelines. For verification, you must submit copies of your identification proof, such as your PAN card, and your address proof, such as your passport, driver’s license, or voter’s ID card.
Tax Treatment
According to the requirements of the 1961 Income Tax Act, the interest on Sovereign Gold Bonds is taxable. Individuals are free from paying capital gains tax when they redeem their SGBs. Long-term capital gains are also granted indexation benefits to investors or when the bond is transferred from one person to another.
Eligibility for SLR
If banks bought bonds after invoking lien, hypothecation, or pledging, they had to account for SLR. The Statutory Liquidity Ratio is the amount of capital a commercial bank must keep in gold, cash, and approved securities before it can extend credit to consumers.
Sales Channel
As may be stated, the government sells bonds through banks, the Stock Holding Corporation of India Limited (SHCIL), and some post offices. SGBs can also be traded directly or through intermediaries on recognized stock exchanges (such as the National Stock Exchange of India or the Bombay Stock Exchange).
Commission
For the distribution of the bond, the receiving offices will charge a commission of 1% of the total subscription amount. They will share at least half of the commission with intermediaries (agents or brokers).
What is the status of HDFC’s sovereign gold bonds?
There is no way to check the status of your application on the HDFC website. You can visit your HDFC home branch and request that your application be canceled. You can see the holding in your bank account once you receive the allotment.
When can I acquire a sovereign gold bond?
Instead, the government will periodically open a window for investors to purchase SGBs. The bonds will not be available throughout the year. The only way out for investors wishing to buy SGBs at any point in the future is to buy previous issues (at market value) that are available on the secondary market.