1. On the amount of the initial investment, SGBs pay a set interest rate of 2.50 percent each year. Interest is credited to the investor’s bank account twice a year.
2. SGBs can be purchased easily online through Sharekhan and held in demat form.
3. SGB pricing are related to the India Bullion & Jewellers Association’s price of 999 pure gold (IBJA).
4. Investing in SGBs reduces the danger of theft and storage costs.
5. Investors are guaranteed the market value of gold at maturity as well as monthly interest.
6. SGBs are devoid of difficulties such as making charges and purity that come with purchasing gold in the form of jewelry.
7. These bonds can be traded on a stock exchange.
8. SGBs have an eight-year term; after the fifth year, the bonds can be encashed or redeemed early.
9. While interest on SGBs is taxable, individuals are excluded from capital gains tax when the bonds are redeemed.
11.Sovereign gold bonds carry a sovereign guarantee because they are issued on behalf of the Indian government by the Reserve Bank of India.
Maturity: Eight years, with an option to exit after the fifth year on interest payment dates; these bonds will be eligible for trade from the day the RBI announces.
Individual subscription limits: A minimum of 1 gram of gold and a maximum of 4 kilograms of gold every fiscal year (April to March); available in increments of 1 gram of gold and multiples thereof.
Limits on subscriptions for trusts and other institutions are as follows: A minimum of 1 gram of gold and a maximum of 20 kilograms of gold per institution per fiscal year (April-March); available in 1 gram and multiples of 1 gram of gold.
Interest on SGBs will be taxed according to the provisions of the Income Tax Act of 1961. (43 of 1961).
Individuals are excluded from paying capital gains tax when SGBs are redeemed.
Long-term capital gains occurring to any individual on the transfer of bonds shall be eligible for indexation advantages.
Is it possible to receive the bonds in demat form?
Is it possible to receive the bonds in demat form? Yes. Bonds can be held in a depository account. A explicit request must be made for this in the application form itself.
What is the procedure for purchasing a sovereign gold bond?
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 is the procedure for downloading SGB bonds?
Select SGB bonds as an investing option. Select “Download Past Certificate” to download the Sovereign Gold Bond Certificate.
How do I purchase a gold ETF on Sharekhan?
Gold Exchange Traded Funds (Gold ETFs) can be purchased and sold using your present brokerage account with your broker. Brokers such as Sharekhan, Geojit BNP Paribas, and Angel Broking can help you open a demat and brokerage account.
What is the procedure for transferring my demat account to SGB?
By filing a dematerialisation request to the issuer banker or financial intermediary, physical SGBs purchased through a bank or other financial intermediary can be converted to demat form. To process your request, the bank/intermediary will upload the data to the RBI’s e-Kuber platform.
A copy of your CMR (attested by the DP) will be required to process the dematerialisation request. This page explains what CMR is and how to obtain a copy.
Note: If you acquired the SGB through a bank, you must contact the bank’s Nodal branch.
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 procedure for demating a bond?
In the secondary market, we currently allow dematerialization of bonds and debentures.
You must submit a de-materialization request by filling out the form below, and the RTA must accept it. We’ll begin the dematerialization process once we receive RTA permission.
1. For each scrip/business, make three copies of the dematerialization request form (3 DRFs will suffice for up to four bond certificates from the same firm). If you have more than four certificates, you will need to submit an additional DRF). You must select the ‘Bond’ option from the ‘Type of security’ drop-down menu.
2. The Client ID should be mentioned in the ‘Signature with DP’ and ‘Signature with RTA/Issuer’ columns of the DRF (Dematerialization Request Form) (If It is a joint account then both the holders need to sign).
3. Along with the DRFs, the original bond certificates must be supplied. (A photocopy can be kept with you.)
4. A copy of your PAN that has been self-attested.
The RTA (Registrar And Share Transfer Agent) will take up to 25 days to finish the dematerialization process once you submit the following.
To begin the process of dematerializing your physical bond certificates, please submit a ticket using the form below.
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.