The Sovereign Gold Bond Scheme 2023-24 – Series II is open for subscription from today, September 11. The issue price is Rs 5,923 per gram of gold, while there is a discount of Rs 50 for those investors who subscribe online. For such investors, the issue price of a Gold Bond will be 5,873 per gram of gold.
The subscription period closes on Friday.
The nominal value of the bond is based on the simple average closing price published by the India Bullion and Jewellers Association Ltd (IBJA)) for gold of 999 purity in the last three working days of the week preceding the subscription period. In this case, it is September 6, September 7, and September 8, 2023.
The advantage of SGB over other forms of gold is on multiple counts. Apart from capital appreciation, SGBs offer a 2.5% interest on the capital appreciation, Personal Finance expert Jitendra Solanki said.
There is no capital gains tax if one remains invested for 8 years, he added.
“SGBs are highly liquid and are traded on the exchanges, Solanki further said. There is a sovereign guarantee and no danger of a default. Moreover, there is no expense in managing it,” the expert said.
Solanki’s advice to investors is to remain invested for 8 years to take benefits of capital gains tax exemption. Selling SGBs in the secondary market before maturity invites tax at 20% on capital gains arising from such transactions. The instrument gives indexation benefits to the buyers if the SGB is sold on or after three years and would also be subject to a marginal tax rate if sold before three years.
8 Reasons Why You Must Buy SGBs:
1) SGBs are good long-term investment bets, and capital appreciation is likely to happen significantly if one holds it for 8 years.
2) There is no risk of purity.
3) No risk of default as it is backed by Sovereign guarantee.
4) No capital tax gains if held for 8 years.
5) SGBs are traded on exchanges hence are highly liquid, unlike physical gold.
6) Investors get 2.5 per cent interest on investment, which is payable semi-annually.
7) Can be pledged as collateral if one seeks a loan.
8) Retail investors get SGBs on discount if the application is made online.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)