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Sovereign Gold Bond (SGB)


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.

Benefits:


Fixed interest rate of 2.5% , payable every 6 months on initial investment.
The quantity of gold for which the investor pays is protected as he receives the ongoing market price at the time of redemption.
The issue price of the Gold bonds will be Rs. 50 per gram less than the nominal value.
A superior alternative to holding gold in physical form.
The risks and costs of storage are eliminated.
SGB is free from issues like making charges and purity in the case of gold in jewellery form.
The bonds are held in the books of the RBI or in Demat form eliminating risk of loss of scrip etc.
Joint holding is allowed
The capital gians tax arising on redemption of SGB to an individual has been exempted but the interest on Gold Bonds shall be taxable as per provision of Income Tax Act,1961 (43 of 1961).


Eligibility


Persons resident in India as defined under Foreign Exchange Management Act, 1999
Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.
Minor can also apply with the help of his/her guardian.