Investing in Sovereign Gold Bonds this Winter

[Vivek Jalan]

Tax people should also invest their monies wisely and Sovereign Gold Bonds are instruments where the capital gains tax arising on redemption to an individual is exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of the SGB. Interest on SGBs, though, shall be taxable as per the provision of Income Tax Act, 1961. These SGBs are restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. The SGB 2023-24 Series III will be open for subscription from December 18-22. The date of issuance for this SGB tranche is December 28. The second tranche of the Sovereign Gold Bonds scheme will be open for subscription from February 12-16, 2024 and will be issued on February 21, 2024.

The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram. The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable. Minimum permissible investment will be One gram of gold. The maximum limit of subscription shall be 4 Kg for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March), as notified by the Government from time to time. A self-declaration to this effect will be obtained from the investors at the time of making an application for subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year.

The investors will also be paid a fixed rate of 2.50% per annum payable semiannually on the nominal value. Price of SGB will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode. The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA Ltd.