Sovereign Gold Bonds (SGBs) are issued by the Reserve Bank of India on behalf of the Government of India, providing investors with an opportunity to invest in gold without the need for physical ownership. These bonds are denominated in grams of gold, serving as efficient alternatives to holding physical gold.
Investor’s benefit from price protection, receiving the prevailing market price at redemption, while avoiding storage risks and costs. SGBs assure investors of gold’s market value at maturity, along with periodic interest payments. Unlike physical gold, SGBs sidestep issues like making charges and gold purity concerns.
Residents of India, including individuals, HUFs, trusts, universities, and charitable institutions, can invest in SGBs. Bonds are issued in one-gram denominations, with a minimum investment of one gram and maximum subscription limits.
With a fixed coupon rate of 2.50% per annum, interest is credited semi-annually to the investor’s bank account and is taxable under the Income-tax Act, 1961. SGBs offer low transaction costs compared to physical gold, making them appealing for risk-averse investors.
Gold bonds mature after eight years, with tax-free capital gains if held until maturity. As part of diversification strategies, clients are encouraged to allocate a portion of their savings to SGBs, supported by dedicated investing services.