Sovereign Gold Bond 2023-2024 Series I opens for subscriptions today; here are the details

Subscriptions start today, June 19 and the window will be closed on June 23, 2023. In addition to a market-linked return, the Bonds will offer an interest of 2.5% per annum and will be provided semi-annually basis.

The Government of India has announced the launch of the Sovereign Gold Bond (SGB) Scheme 2023-24 series I. It will be open today June 19, 2023, and will close on June 23, 2023. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. The Bond is issued by the Reserve Bank of India on behalf of the Government of India.

The question would arise why should one buy the SGB over physical gold well, SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity or prematurity redemption as well as periodical interest. It is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating the risk of loss of scrip etc.

The Bonds shall be issued as per the following details:

Resident individuals, Hindu Undivided Family (HUFs), Universities, trusts, and charitable institutions can invest in this scheme. Investors can subscribe to the Bonds by filling out the application form which is available on the RBI website also some Scheduled Commercial Banks, Post Offices, Stock Holding Corporation of India, NSE, and BSE are authorized to receive applications either directly or through agents.

The Bonds are issued in denominations of one gram of gold and in multiple thereof. The minimum Investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts.

In addition to a market-linked return, the Bonds will offer an interest of 2.5% per annum and Interest will be provided semi-annually basis.

The Reserve Bank has agreed to offer a discount of Rs 50 per gram less than the nominal value to investors who apply online and pay for the application via digital mode.

The Bond’s issue price will be the simple average of the closing price by the Indian Bullion and Jewellery Association (IBJA) for gold of 999 purity on the last three working days of the week preceding the subscription period. In case of redemption, the redemption price will be INR based on the simple average closing price of gold of 999 purity of the previous 3 business days published by IBJA.

The tenor of the bond is 8 years and investors are allowed to redeem the bond after the fifth year. The bonds will be tradable in exchanges if held in demat form. One more benefit of purchasing SGBs is they can be used as loan collateral.

The interest earned through the scheme is taxable and eligible for indexation benefits. The capital gains arising from the redemption of gold bonds are exempted from the capital gains tax if the bond is held till maturity.

It is likely to be the perfect time to buy SGBs and add gold as a strategic asset to the portfolio. Prices are seen consolidating after a sharp advance, and expectations that the US Fed is nearing the end of its rate hike campaign amid receding inflationary pressures are likely to act as a tailwind for gold while suppressing the rival dollar index. As central banks around the world are buying up gold in record amounts, it is looking increasingly attractive as one of the safe investment options.