Gold is a yellow metal that’s always in demand. In particular, we Indians connect to gold emotionally and always get attracted to buy. SGB is a unique way to invest in gold without holding physical gold. Sovereign Gold Bond Scheme 2023-24 Series 2 is now open for subscription.
Series-I was issued in June 2023 at Rs. 5,915. However, series-II is a little expensive and is available at Rs. 5,923, and if you apply online and the payment is made through digital mode, you can avail of a discount of Rs. 50 per gram.
Table of Contents
Features- Sovereign Gold Bond Scheme 2023-24 Series II
🔹Subscription date
Sovereign Gold Bond Scheme 2023-24 Series-II is open for subscription from today, i.e., 11th Sep 2023 to 15th Sep 2023.
🔹Who can subscribe/invest?
Only resident individuals, HUFs, Trusts, Universities, and Charitable Institutions can subscribe to the Sovereign Gold Bond Scheme 2023-24 Series-II.
If you are NRI, then you cannot subscribe.
🔹How much can you invest?
- – Individual: Minimum 1 gram and maximum 4 Kg for individuals,
- – HUF: Minimum 1 gram and maximum 4 Kg
- – Trusts and similar entities: Minimum 1 gram and maximum 20 Kg
- In joint holding, the investment limit of 4 Kg will only apply to the first applicant. The annual limit for the financial year will comprise bonds subscribed to across various tranches.
🔹Interest Rate
The Sovereign Gold bond interest rate is fixed at 2.5 % p.a payable semi-annually on the invested value.
🔹Issue Price
The Sovereign Gold Bond price will be determined in Indian Rupees, based on the simple average of the closing prices of 999 purity gold as reported by IBJA (India Bullion and Jewellers Association Limited) for the last three working days preceding the subscription period.
The issue price is fixed at Rs. 5,923 per gram of gold, and if you apply online and the payment is made through digital mode, you can avail of a Rs.—50 discount per gram, which means it will come for Rs.5,873 per gram of gold.
🔹Payment option
You can pay through cash (up to a maximum of Rs. 20,000), cheque, demand draft, or electronic banking.
🔹Issuance form
The Sovereign Gold Bond will be issued as Government of India Stock per the Government Securities Act, 2006. Investors will receive a Certificate of Holding for their Sovereign Gold Bond, which can be converted into a dematerialized (demat) form.
🔹Redemption
- – Upon Maturity- Upon completion of 8 years from the date of subscription
The redemption amount will be in Indian Rupees. The government will pay you the maturity amount, calculated using the simple average of closing prices of 999 purity gold for the three preceding working days, as reported by IBJA Ltd. This amount is credited to your registered bank account.
- – Before maturity- After completion of 5 years from the date of subscription
After five years, you can apply for pre-mature redemption, and such redemption payment will be made on the interest payment date.
🔹Loan against Bond
The SGBs can be used as security/collateral for loans.
🔹Trading of SGB
The SGBs will be eligible for trading.
🔹Nomination procedure
At any point, nomination-related, you can use Form-D and Form-E. Form-D for nomination and Form-E for its cancellation.
🔹Tax treatment
The interest earned on SGBs will be subject to taxation per the provisions of the Income Tax Act, 1961 (43 of 1961). However, individuals will enjoy an exemption from capital gains tax upon the redemption of SGBs. Furthermore, indexation benefits will be extended to individuals who realize long-term capital gains from the transfer of SGBs.
Benefits of Investing in Sovereign Gold Bond Scheme 2023-24 Series II
- Gold Exposure: SGBs are a gateway to take gold exposure without holding physical gold.
- Safety: Being government-backed, SGBs are one of the safest ways to invest in gold.
- Income Stream: The fixed interest rate provides a regular income stream.
- Tax Efficiency: Tax benefits make SGBs attractive for long-term gold investment.
- No Storage Hassles: There is no need to worry about storage or security like physical gold.
Disadvantage of Investing in Sovereign Gold Bond Scheme 2023-24 Series II
- Volatility Viz. Return: One of the most significant disadvantages of SGB is volatility. The price of gold moves like equity; however, the expected return is like a debt. With SGB, if the gold price is low upon maturity, you are not left with the option to hold. It’s better to invest in post office instruments, viz. SGB gold.
- Liquidity: SGBs are tradable; however, the initial 5-year lock-in period is a concern.
Where to buy Sovereign Gold Bond Scheme 2023-24 Series II?
You must have a PAN to apply for Sovereign Gold Bond. You can apply for the subscription via below-mentioned channels:
🔹Commercial banks (except Regional Rural Banks, Payment Banks, and Small Finance Banks)
🔹SHCIL (Stock Holding Corporation of India Limited)
🔹CCIL (Clearing Corporation of India Limited)
🔹Designated post offices (as may be notified)
🔹Recognized stock exchanges – Bombay Stock Exchange Limited and National Stock Exchange of India Limited (directly or through agents).
Sovereign Gold Bond Scheme 2023-24 Series II – Should You Subscribe?
It is tough to believe, but it is a fact that gold price is volatile like equity; however, the expected return is like a debt instrument.
With SGB, you don’t have the option to extend holding on maturity; this means you will get the redemption after the completion of 8 years, and if the gold price falls, you will get the discounted value.
If you wish to invest in SGB just because you want to, go for it, or better to stay away. It is suggested to avoid making SGB part of your financial planning (financial goals and investment portfolio). When it comes to investing, think wisely and not emotionally.
