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    Subscription to Sovereign Gold Bonds under tenth tranche ends today; here's all you need to know about its tax benefits

    Subscription to Sovereign Gold Bonds under tenth tranche ends today; here's all you need to know about its tax benefits

    Subscription to Sovereign Gold Bonds under tenth tranche ends today; here's all you need to know about its tax benefits
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    By Anshul   IST (Updated)

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    SGBs earn interest at 2.5 percent on initial investment and have a maturity period of 8 years with an option to exit from the fifth year onwards.

    The tenth installment (series X) of the Sovereign Gold Bond (SGB) scheme for 2020-21 will close for subscription today. The issue price for the same is Rs 5,104 per gram of the yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.
    SGB is issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.
    The market price of these bond move in line with domestic gold prices.
    SGBs earn interest at 2.5 percent on initial investment and have a maturity period of 8 years with an option to exit from the fifth year onwards.
    According to Archit Gupta, founder, and CEO, ClearTax, the interest earned in case of SGB is taxed as income from other sources.
    In case, the bonds are held to maturity, the capital gains are tax-exempt. However, capital gains are payable on the transfer of SGB like transfer of physical gold or ETF or Gold MF.
    "The bonds are traded on exchanges in demat form and redeemable after the fifth year. When sold before maturity, the gains are long-term capital gains and taxable at 20 percent (plus education cess and surcharge). The purchase price can be indexed using the cost inflation index," explains Gupta.
    Considering tax benefit (if held till redemption), SGB can be considered as a preferred investment. Also, 2.5 percent interest can make a big difference to the overall return.
    Additionally, with SGBs, investors are not required to worry about the storage of gold as it is in a demat form. Also, there are no local taxes that a buyer needs to pay while buying.
    People looking to invest in SGBs can do it via online banking or through their Demat accounts.
    To invest through banks, customers will need to log into their net banking account. The bank page will show the SGB option (mostly in investment options). It can also be available on the bank’s home page or under services.
    Disclaimer:
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