Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are a popular investment option in India that allows individuals to invest in gold in a more structured and regulated manner. These bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.

Here are some key features:

Gold Investment with Interest: SGBs provide investors with an opportunity to invest in gold without the need to physically hold the metal. Investors earn a fixed interest rate on the initial investment amount, which adds an additional income component to their investment.
Government-Backed: SGBs are issued by the Government of India, making them a sovereign-backed investment.
Issue Periods: The government announces specific issue periods for SGBs during which investors can subscribe to the bonds. These periods are typically spread out over the course of a year.
Pricing: The issue price of SGBs is linked to the prevailing market price of gold. This ensures that investors are not disadvantaged due to price fluctuations at the time of subscription.
Tenure: SGBs have a fixed tenure of 8 years. However, investors have the option to exit prematurely from the 5th year onwards on specific interest payment dates.
Interest Rate: The bonds carry a fixed interest rate that is paid semi-annually. The rate is determined by the government and remains constant throughout the tenure of the bond.
Tradability: SGBs are listed on stock exchanges, providing investors with the option to trade them on the secondary market. This enhances liquidity and allows investors to exit their investment before maturity if needed.
Demat Account: SGBs are issued in Physical, e-certificate or in dematerialized form. Having a Demat account streamlines the process of buying, selling, and holding the bonds.
Capital Gains: Capital gains arising from the redemption of SGBs are exempt from tax. However, any gains from selling SGBs on the secondary market are subject to capital gains tax.
Minimum and Maximum Investment: Minimum permissible investment will be 1 gram of gold. The maximum limit of subscribed shall be 4 KG for individual, 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.

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