State Bank of India (SBI), the country's largest lender, has listed six golden reasons for investing in Sovereign Gold Bonds (SGBs). SGBs, as we know, are issued by the government, for which investors get a holding certificate. These comprise government securities denominated in gold wherein investors are required to pay the issue price in cash.
The third tranche of sovereign gold bonds (SGB) scheme for 2021-22 opened for subscription on Monday. The issue price for this has been fixed at Rs 4,889 per gram, while a discount of Rs 50 per gram has been provisioned for online subscribers. While the subscription period for this series will end on June 4, the bonds will be issued on June 8.
Here are key benefits of investing in SGB, according to SBI:
Assured returns of 2.5 percent p.a. payable half-yearly
With SGBs, investors stand to gain 2.5 percent per annum fixed interest on their investment.
No storage hassles like physical gold
An investor does not have to worry about the storage of gold as SGBs are in a demat form.
SGBs are tradable on stock exchanges within a fortnight of issuance on a date notified by the Reserve Bank of India.
No capital gain tax on redemption
The capital gains tax arising on redemption of SGB to an individual is exempted.
Can be used as collaterals for loans
Sovereign gold bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the central bank from time to time.
No GST and making charges
Unlike physical gold, there is no goods and services tax (GST) levied or making charges on sovereign gold bonds.
Meanwhile, SBI customers can invest in these bonds on -- onlinesbi.com -- under e-services, the lender mentioned in a tweet.
The maximum limit of subscribed shall be 4 kg for individuals, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal year (April-March) notified by the government from time to time. In the case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.