11 Golden Reasons to Invest in SGBs, Sovereign Gold Bonds

Know the 11 golden reasons to invest in SGBs, Sovereign Gold Bonds (SGBs) scheme, the 2020-21 Series IV – The subscription for the fourth tranche of the Sovereign Gold Bonds (SGBs) scheme, the 2020-21 Series IV, is open for subscription and will close on July 10, 2020. The SGBs will be allotted on July 14.

This is a great opportunity for you to invest in gold. SGBs are government securities denominated in grams of gold. These are substitutes for holding physical gold. SGBs are issued by the central bank on behalf of the Government of India. Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity.

There are many reasons for buying gold. The yellow metal acts as a hedge against inflation. It is a relatively stable investment compared with equities, having a good diversification strategy. 

11 golden reasons to invest in SGBs

  1. SGBs carry a fixed interest rate of 2.50% per annum on the amount of the initial investment. Interest is credited semi-annually to the bank account of the investor.
  2. You can easily purchase SGBs online through brokrage firm and hold the bonds in demat form. If you donot have Demat account open , ZERO BALANCE DEMAT ACCOUNT WITH ANGEL BROKING – CLICK HERE
  3. SGB prices are linked to the price of gold of 999 purity published by India Bullion & Jewelers Association (IBJA).
  4. Investing in SGBs eliminates the risk of theft and the cost of storage.
  5. Investors are assured of the market value of gold at the time of maturity and periodical interest.
  6. SGBs are free from issues like making charges and purity associated with purchase of gold in jewellery form.
  7. These bonds are tradeable on the Exchanges.
  8. SGBs have a tenure of eight years and early encashment/redemption of the bonds is allowed after the fifth year.
  9. Interest on SGBs is taxable but the capital gains tax arising on redemption of the bonds is exempted for individuals.
  10. SGBs can be used as collateral for loans.
  11. Sovereign gold bonds carry the sovereign guarantee as these are issued by the Reserve Bank of India on behalf of the Government of India.

Also Read – How To Invest In SGB Gold Bond Scheme ? Complete Details !

2020-21 Series IV SGB issue details

Offer period:July 6 to 10, 2020 (the bonds will be issued on July 14).
Issue price:Rs 4,802 (per gram of gold).
Maturity:8 years with exit option from the fifth year to be exercised on interest payment dates; these bonds will be eligible for trading from the date as notified by the RBI.
Subscription limits for individuals:A minimum 1 gram of gold and a maximum 4 kilogram of gold per person in a fiscal (the April-March period); available in units of 1 gram of gold and multiples thereof.
Subscription limits for trusts and other institutions:A minimum 1 gram of gold and a maximum 20 kilogram of gold per institution in a fiscal (the April-March period); available in units of 1 gram of gold and multiples thereof.
Taxation:The interest on SGBs shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961).
Individuals are exempted from paying the capital gains tax arising on redemption of SGBs.
The indexation benefits will be provided to the long-term capital gains arising to any person on transfer of the bonds.

SGB issuance calendar for 2020-21

S. No.TrancheDate of SubscriptionDate of Issuance
12020-21 Series IApril 20-24, 2020April 28, 2020
22020-21 Series IIMay 11-15, 2020May 19, 2020
32020-21 Series IIIJune 8-12, 2020June 16, 2020
42020-21 Series IVJuly 6-10, 2020July 14, 2020
52020-21 Series VAugust 3-7, 2020August 11, 2020
62020-21 Series VIAugust 31-September 4, 2020September 8, 2020

Enter your email address:

We will be happy to hear your thoughts

      Leave a reply

      AskBanking - Banking FAQs & Support Blog