Sovereign Gold Bond (SGB) 2024-25: Next Issue Date, Price, Interest Rate, Calculator, Benefits, How To Buy Online

For Indians, the reverence they have for gold is beyond its market value. Now there are ways to own gold without its inherent risks or bearing making and wastage charges. Sovereign Gold Bonds are one such alternative offered by the Government of India and the Reserve Bank of India (RBI). Here, you can own gold in ‘certificate’ format.  

What is a Sovereign Gold Bond?

The Government of India introduced the Sovereign Gold Bond (SGB) Scheme in November 2015 to offer an alternative investment to physical gold. Over the years, the market has witnessed a considerable decline in the demand for physical gold. SGBs not only track the export-import value of the asset but also ensures transparency at the same time.

SGBs are government securities and are considered safe. Their value is denominated in multiples of grams of gold. SGBs have witnessed a significant increase in investors, with it being considered a substitute for physical gold. If you are looking to purchase an SGB, all you have to do is approach a SEBI-authorised agent or broker. Once you redeem the bond, the corpus (as per the current market value) will be deposited into your registered bank account. 

Sovereign Gold Bond Next Issue and Upcoming Issues

Sovereign Gold Bond 2023-24 Series IV

Sovereign Gold Bond Price History

The price history of SGB for FY 2023-24 is as follows:

The price history of SGB for FY 2022-23 is as follows:

Who Should Invest in Sovereign Gold Bonds?

You may consider diversifying your portfolio with at least 5%-10% in gold. As a low-risk investment, it is perfect for investors with a low-risk appetite. The cost to purchase or sell SGBs is quite low compared to physical gold.  The expense of buying or selling the SGB is also nominal compared to the physical gold.

Those who do not want to go through the hassles of storing physical gold can also go for SGBs. This is because it is easy to store this in Demat form, and nobody can steal it as they are in electronic form.

Features of Sovereign Gold Bonds

Eligibility Criteria

Any Indian resident – individuals, Trusts, HUFs, charitable institutions, and universities – can invest in SGB. You may also invest on behalf of a minor.

Issuance of Bonds

Only RBI can issue SGBs on behalf of the Central Government, and they are traded on the Stock Exchange. It is issued in multiples of one gram of gold. Investors will receive a Holding Certificate for it. You can also convert it to Demat form.

KYC Documentation

You must follow the same Know-your-customer (KYC) norms as when you buy physical gold. You must complete KYC by submitting copies of identity proof such as a PAN Card and address proof such as a passport, driving license or Voter’s ID card for verification.

Capital Gains

The interest on Sovereign Gold Bonds is taxable as per the provisions of the IT Act, 1961. In the case of SGB redemption, the capital gains tax applicable to an individual is exempted. Also, long-term capital gains generated are offered indexation benefits to an investor or when transferring the bond from one person to another.

Eligibility for SLR

If banks have acquired bonds after going through the process of invoking lien, hypothecation or pledging, then they accounted for SLR. The capital a commercial bank has to maintain in gold, cash, and approved securities before offering credit to customers is called Statutory Liquidity Ratio (SLR).

Redemption Price

The redemption price must be in rupees, based on an average closing price of gold of 999 purity in the previous three working days.

Sales Channel

The government sells bonds through banks, Stock Holding Corporation of India Limited (SHCIL), and selected post offices, as may be informed. The trading of SGBs also occurs via recognised stock exchanges (National Stock Exchange of India or Bombay Stock Exchange) directly or through intermediaries.

Commission

The receiving offices shall levy 1% of the overall subscription amount as commission for the bond distribution. From this commission, they will share at least half with intermediaries (agents or brokers).

Sovereign Gold Bond Maturity Period

The maturity period of the sovereign gold bond is eight years. However, you can choose to exit the bond from the fifth year (only on interest payout dates). 

Sovereign Gold Bond Maturity Redemption

Two Sovereign Gold Bonds (SGBs) launched in 2016 have matured in 2024 and come up for final redemption. The SGB 2016 Series I issued on 8 February 2016 matured on 8 February 2024 after completing its 8-year bond period. The issue price of SGB 2016 Series I was Rs. 2,600 per gram, and the final redemption amount is Rs. 6,271 for each SGB unit. 

The SGB 2016 Series II matured on 28 March 2024 (since 29 March 2024 is a holiday) after its completion of the 8-year period. The SGB 2016 Series II was issued on 29 March 2016, and the final redemption amount is Rs. 6,601 for each SGB unit. 

The Sovereign Gold Bond 2016-17 - Series I, 2016–17 - Series II and 2016–17 - Series III will also come up for final redemption this year. SGB 2016-17 Series I, which was issued at a price of Rs. 3,119 on 5 August 2016, will tentatively go for final redemption in August 2024. SGB 2016-17 Series II, which was issued on 30 September 2016 at an issue price of Rs 3,150, will tentatively go for redemption in September 2024. SGB 2016-17 Series III, which was issued at a price of Rs. 3,007 on 17 November 2016, will tentatively go for final redemption in November 2024.

Sovereign Gold Bond Premature Redemption Price

The price for redemption is determined based on the simple average closing price of gold with 999 purity in the previous three working days, as reported by the India Bullion and Jewellers Association Ltd (IBJA). 

Thus, the final redemption price for the SGB 2016 Series I redemption due on 8 February 2024 is Rs. 6,271 per unit of SGB based on the simple average of closing price of gold for the week of 29 January -02 February 2024. 

Similarly, the final redemption price for the SGB 2016 Series II redemption due on 28 March 2024 is Rs. 6,601 per unit of SGB based on the simple average of closing price of gold for the week of 18 March -22 March 2024.

On 27 October 2023, the RBI announced the premature redemption price of Rs.6,079 per unit of SGBs issued on 30 October 2017. Investors can initiate early redemption of their SGBs after the fifth year from the date of SGB issuance, coinciding with the interest payment date. Thus, those who have invested in SGBs issued on 30 October 2017 can redeem them prematurely on 30 October 2023 at Rs.6,079 per unit. 

The redemption price for premature redemption of SGBs due on 30 October 2023 is Rs.6,079 per unit based on the simple average closing price of gold for the previous three business days from the redemption date, i.e., 25-27 October 2023.

Sovereign Gold Bond Interest Rate/Return

The current interest rate for SGB is 2.50% per annum on your initial investment. It is paid twice a year (semi-annually) for 8 years, i.e. till maturity. Interest will be credited directly to your account, which you shared while investing. Returns are usually linked to the current market price of gold. 

Sovereign Gold Bond Maximum Limit

The value of the bonds is assessed in multiples of gram(s) of gold, wherein the basic unit is 1 gram. The minimum initial investment is 1 gram of gold, and the upper limit is 4 Kg of gold per investor (individual and HUF). For entities such as trusts and universities, 20 Kg of gold investment are permissible.

How to Buy a Sovereign Gold Bond Online?

A person can apply for a Sovereign Gold Bond through their banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges, such as the Bombay Stock Exchange and National Stock Exchange of India Limited, either directly or through agents.

SGBs can also be bought online through the commercial banks’ websites authorised to sell them. The process to purchase SGBs through a bank’s online website is as follows:

• Login to the bank’s internet banking account.
• Click on the ‘e-service’ option and choose the ‘Sovereign Gold Bond’ option.
• Read the terms and conditions and click the ‘Proceed’ option.
• Fill out the registration form and click the ‘Submit’ button.
• In the purchase form, enter the nominee details and subscription quantity.
• After verifying all the details, click the ‘Submit’ option.

How to Check Sovereign Gold Bond Status?

When you have purchased a Sovereign Gold Bond online with a Demat account, it will reflect in the portfolio after the SGB issuance. In case of offline purchase, a person can collect the SGB certificate of holding from the issuing bank, post offices, SHCIL offices, designated stock exchanges or agents. The RBI will mail the digital copy of the holding certificate to the email address entered in the application form.

Sovereign Gold Bond Certificate Download

The customers will be issued the holding certificate on the SGB issuance date. If a person has opted to receive the physical form of certificate, it will be mailed to the registered email ID; otherwise, it will reflect in the Demat account on the SGB issuance date. Customers can also collect the certificate of holding from the bank branch.

Sovereign Gold Bond Tax Exemption Under Section 80C

There are no tax deduction benefits for the lump sum deposit of SGBs under Section 80C of the Income Tax Act. The interest given on SGB deposits is also not tax-free. The interest amount must be declared under ‘Income from Other Sources’ during tax returns. The income tax will be as per the individual’s income tax slab. Tax Deducted at Source (TDS) is not applicable on SGBs. However, they are exempt from capital gains tax when held till maturity.

Sovereign Gold Bond Benefits

Absolute Safety

Sovereign Gold Bonds have none of the risks associated with physical gold except the market risks. There are no hefty designing or wasting charges here. Moreover, SGBs earn interest, unlike physical gold, which is an idle investment.

Extra Income

You can earn a guaranteed annual interest at the rate of 2.50% (on the issue price); this is the most recent fixed rate.

Indexation Benefit

Long-term capital gains arise when investors transfer bonds qualify for indexation benefits. There is also a sovereign guarantee on the principal and the interest earned.

Tradability

You can trade gold sovereign bonds on stock exchanges within a specific date (at the issuer's discretion). For instance, after completing five years of investment, you can trade them on the National Stock Exchange or Bombay Stock Exchange, among others.

Collateral for loans

Some banks accept SGB as collateral/security against loans pledged in Demat form. Hence, they will treat it as a gold loan after setting the loan-to-value (LTV) ratio to the value of gold. The India Bullion and Jewellers Association Limited determines this.

Comparing SGB with Physical Gold & Gold ETFs

Gold Sovereign Bonds are new-age investment vehicles for those interested in diversifying their portfolio with gold holdings.

Frequently Asked Questions

Is it safe to invest in sovereign gold bonds?

An SGB is issued as per the Government Security Act, 2006, by the RBI on behalf of the central government. Since it is backed by the government, it is one of the safest forms of investment as the chances of defaults on repayment are zero.

Which bank is best to invest in sovereign gold bonds?

The gold bonds are sold through the branches or offices of nationalised banks, designated post offices, scheduled foreign banks and scheduled private banks. You can choose any bank to invest in SGBs. It is recommended to apply for an SGB where you have a bank account.

Are sovereign gold bonds tax-free?

The annual interest paid on SGBs of 2.5% is taxable at a marginal slab rate. However, when you withdraw the lump sum amount upon maturity, no capital gains apply to them. 

Is the interest on sovereign gold bonds taxable?

Yes. Interest on the SGBs will be taxable as per the provisions of the Income-tax Act, 1961.

How to buy a sovereign gold bond in Zerodha?

You can place an SGB purchase order by logging into Zerodha’s Gold Bond page.  You can also log in to the Coin by Zerodha dashboard and click on ETFs and SGBs to invest in the Sovereign Gold Bond scheme. You need to click on the ‘Sovereign Gold Bond investment’ option, fill in the required details and click the ‘Place order’ button to invest in SGB.

How to buy a sovereign gold bond from SBI Bank?

Following are the steps to invest in SGB via SBI bank:

• Log in to SBI net banking account.
• Click on ‘eServices’ and click on ‘Sovereign Gold Bond Scheme’.
• Click on ‘Purchase’, select your account number, select the ‘Terms and conditions’ box and click on ‘Proceed’
• Fill out the registration form and click on ‘Submit’.

How to redeem sovereign gold bonds?

You can redeem the SGBs up on maturity, i.e. after completion of the 8th year or partially after the 5th year. After the maturity period of eight years, both interest and redemption proceeds will be credited to the bank account provided at the time of buying the bond. 

How to sell sovereign gold bonds?

You can sell SGBs in secondary markets through stock brokers or transfer them in the name of third persons by using Delivery Instruction Slip (DIS) slips. Currently, only a few stockbrokers are selling SGBs in the secondary market, such as Zerodha and Upstox. If your stock broker is not allowed to sell gold bonds in the secondary market, you have the following options to sell SGBs:

• You have to sell your gold bonds by using DIS slip to a known person
• Approach your stock broker and ask him to place an order to sell the gold bonds in the secondary market
• Open a new Demat account with stock brokers who sell and buy SGBs in the secondary market and transfer the existing holding by using DIS slip

Is sovereign gold bond a good investment?

Yes, it offers a lucrative, efficient and economical mode of holding gold compared to physical gold. They are productive assets earning interest and have the additional benefits of a sovereign guarantee.

Can NRIs invest in sovereign gold bonds?

No, NRIs (Non-Resident Indians) are not eligible to purchase SGBs. However, if a resident becomes NRI after purchasing an SGB, then he/she can continue to hold the SGB until maturity.

What happens when I invest for 8 years in a sovereign gold bond?

After 8 years, the SGBs mature, and the interest and redemption proceeds will be credited to the bank account. You will be informed about its maturity status one month before the maturity date. If there is any change in details, such as email IDs, account numbers, etc., you must inform the bank, post office or SHCIL where you bought the SGB regarding the change.

Can nominees claim the sovereign gold bond amount upon the death of the investor? 

Yes, a nominee can approach the respective bank where the investor had purchased the SGB and file the claim. If there is no nomination for SGB, the executors or administrators of the deceased holder or the holder of the succession certificate can submit a claim to the respective bank, receiving offices or depository. 

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