Sovereign Gold Bond Scheme 2023-24 Series IV

MCX:GOLD1!   Gold Futures
Sovereign Gold Bond
Scheme 2023-24 Series IV opens:-

Sovereign Gold Bonds (SGB) are back, and the first such issue in the calendar year 2024 launches on 12 February 2024. The Reserve Bank of India (RBI) has set the issue price at Rs 6,263 per gram of gold. The public issue will close on 16 February 2024. SGBs applied for under the 2023-2024 Series IV will be issued on 21 February 2024. 

What is Sovereign Gold Bond (SGB) & Who is the issuer ?

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

What is the minimum and maximum limit for investment ?

The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions

Key details of Sovereign Gold Bonds (SGBs):-

1. Denomination: SGBs are denominated in grams of gold, and investors can buy in multiples of grams.

2. Interest Rate: They offer a fixed rate of interest, typically paid semi-annually. The interest is taxable, and the rate is decided by the government.

3. Tenure: The bonds have a maturity period of 8 years, with an exit option after the 5th year. This allows investors to sell/trade their bonds on stock exchanges.

4. Subscription Periods: SGBs are issued in tranches, and investors can subscribe during specific periods announced by the government.

5. Minimum and Maximum Investment: There is a minimum and maximum limit for investment in SGBs per financial year per individual.

6. Eligibility: Individuals, HUFs, trusts, universities, and charitable institutions are eligible to invest in SGBs.

7. Tradability: SGBs are tradable on stock exchanges, enhancing liquidity.

8. Tax Implications: While the interest is taxable, the capital gains arising on redemption are exempt if held until maturity.

Main differences between Sovereign Gold Bonds (SGBs) and physical gold are:-

1. Form of Investment:
   - SGBs: They are financial instruments issued by the government and represent ownership of gold in paper form.
   - Physical Gold: Involves buying and holding actual gold in the form of coins, bars, or jewelry.

2. Interest Earned:
   - SGBs: Offer a fixed rate of interest, providing an additional income stream to investors.
   - Physical Gold: Does not generate any interest; its value is dependent solely on market price appreciation.

3. Liquidity:
   - SGBs: Tradable on stock exchanges, providing liquidity and the option to sell before maturity.
   - Physical Gold: Selling physical gold can involve additional costs, and liquidity may vary.

4. Storage and Security:
   - SGBs: No need for physical storage as they exist in electronic form, reducing security concerns.
   - Physical Gold: Requires safe storage, which may incur additional costs like renting a safety deposit box.

5. Market Price Exposure:
   - SGBs: The value is linked to the market price of gold, providing exposure to gold price movements.
   - Physical Gold: Directly impacted by changes in the market price of gold.

6. Tax Implications:
   - SGBs: Interest income is taxable, but capital gains on redemption are exempt if held until maturity.
   - Physical Gold: Capital gains tax applies if sold at a profit, and there may be implications for jewelry based on wealth tax.

7. Purity and Quality:
   - SGBs: Guarantee purity standards as they represent a specific quantity of pure gold.
   - Physical Gold: Purity and quality can vary, especially in jewelry, and may require assessment.

8. Convenience:
   - SGBs: Offer ease of buying, selling, and tracking through electronic means.
   - Physical Gold: Involves physical transactions, potentially requiring visits to dealers or jewelers.

Choosing between SGBs and physical gold depends on individual preferences, investment goals, and considerations such as convenience, liquidity, and taxation.

This is for educational purpose only. Please consult your financial Advisor before investing. It's important to check the latest details and terms with official sources or financial experts before making any investment decisions. We are not SEBI registered.


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