Sovereign Gold Bonds

Services : Sovereign Gold Bonds

What is Sovereign Gold Bond?

Sovereign Gold Bond (SGB) is a government-backed bond scheme that allows investors to invest in gold without physical possession.

Key Benefits:

1. No storage worries

2. No risk of theft/loss

3. Fixed interest rate (2.5% pa)

4. Tax-free capital gains (after 5 years)

5. Collateral for loans

6. Sovereign guarantee

Features:

1. Issued by RBI on behalf of Government of India

2. Denomination: 1 gram of gold (min. 1 gram, max. 4 kg)

3. Tenor: 8 years (with exit option after 5 years)

4. Interest: 2.5% per annum, payable semi-annually

5. Redemption: In gold or cash (at investor's option)

Eligibility:

1. Resident Indians (individuals, HUFs, trusts)

2. Institutions (banks, financial institutions)

Investment Limits:

1. Minimum: 1 gram

2. Maximum: 4 kg (individuals), 20 kg (institutions)

Issue Price:

1. Linked to market price of gold (minus discount)

Tax Implications:

1. Interest income: Taxable

2. Capital gains: Tax-free after 5 years