ITR Filing FY 2023-24 (AY 2024-25) live

File your ITR Hassle-Free and Maximise your Refunds

File Today
  • TrustedTrusted by 1 Million+ Users
  • User Rating4.8 Star User Rating
  • SecureAuthorized by Tax Department
ITR Filing
linkedin
whatsapp

What is Sovereign Gold Bond (SGB) Scheme - Eligibility, Price, Tax Benefits & How to Buy

Updated on: 12 Jun, 2024 11:26 AM

We often come across people who like to invest in tax-friendly and secure modes. Especially in a country like India, where people tend to believe investment in gold is the most concrete, safe, and return-generating. But, because of these traditional conventions of society, a significant quantity of gold was not traded in the market, and huge stocks were withheld in households. To curb the practice Indian government came up with an alternative in the name of Gold Bond. The Government launched the Sovereign Gold Bond Scheme in November 2015 under the Gold Monetisation Scheme. The RBI (Reserve Bank of India) notifies the terms and conditions for the scheme from time to time.

To fully comprehend the type of investment, tax benefits, lock-in, returns, and much more, read the complete article below.

What is Sovereign Gold Bond (SGB)?

Sovereign Gold Bonds are government securities denominated in grams of gold. These gold bonds are nowadays used as a substitute for holding physical gold. Those who subscribe to these bonds are known as gold bond Investors. These investors are required to pay the issue price in cash and the bonds will be redeemed in cash on maturity, so no physical exchange of gold will actually be made. Sovereign Gold Bonds were introduced in 2015 under the Gold Monetisation Scheme as an alternative investment to physical gold.

In addition to tracking the import-export value of assets, it also ensures transparency at the same time.

Features of Sovereign Gold Bond

  • Eligibility Criteria –
    A person has to be an Indian resident Individual, HUF (Hindu Undivided Family), Trust, Charitable Institution, or University to be eligible to make a subscription to Gold Bonds. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold Sovereign Gold Bond till early redemption/maturity.
  • Denomination/value-
    A bond’s value is measured in multiples of grams of gold, 1 gram being the basic unit. This means that the initial investment is one gram of gold. The upper limit is 4 kgs of gold per individual & HUF. However, universities and trusts can invest up to 20 kgs of gold.
  • Tenure-
    The maturity period of a gold bond is 8 years. However, an investor can choose to exit the bond after the fourth year only on interest pay-out dates.
  • Price and Payment-
    An investor has the option of paying online, via demand draft or cheque, or up to Rs 20,000 via cash. On making the digital payment or online subscription, one can also avail a discount of Rs 50 for each gram.
  • Interest Rate-
    The gold bonds attract an annual interest rate of 2.5%. They are paid on the nominal value twice a year. Returns are normally linked to the current market price of gold.
  • Issuance of bonds-
    The government of India Stocks has the right to issue gold bonds on RBI’s behalf, according to the GS Act, 2006. https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/GOVTSA130312.pdf
  • KYC Documentation-
    Investors must follow the Know Your Customer (KYC) norms while buying physical gold. Hence, the KYC documents like a copy of a driver's license, PAN Card, passport, or Voter ID needs to be kept.
  • Tax Treatment-
    There is no tax on the proceeds of sovereign gold bonds at the time of redemption. And, you can claim indexation benefits on the long-term capital gain arising when you decide to transfer the bond. This means the tax implications of gold bonds are different from that of physical gold. However, Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (Section 43)
  • Sales Channels-
    The government sells bonds through banks, Stock Holding Corporation of India Limited (SHCIL), and selected post offices as may be informed. The trading also occurs via stock exchanges like the Bombay Stock Exchange (BSE) or the National Stock Exchanges (NSE) of India directly or through intermediaries.

Who Issues Sovereign Gold Bonds?

Sovereign Gold Bonds (SGBs) in India are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. These bonds are a financial instrument that allows individuals to invest in gold without physically owning it. SGBs are denominated in grams of gold and offer investors the opportunity to earn interest, along with the potential for capital gains linked to the price of gold.


What are the Various Sovereign Gold Bond Schemes for the Year 2024-25?

Update:
The Reserve Bank of India (RBI) is likely to announce the first tranche (Series 1) of the Sovereign Gold Bond (SGB) 2024-25 in June 2024, based on past trends. Typically, the RBI releases four SGB tranches throughout the financial year (April-March), beginning with the Series 1 issuance in June. However, the RBI has not yet made an official announcement regarding the SGB 2024-25 series.

The final tranche of Sovereign Gold Bonds (SGBs) for the 2023-24 series opened for subscribers on February 12, 2024, and will close on February 16, 2023. If the application is successful, the allotment will be made on February 21.

The price history of SGB for FY 2023-24 is as follows:

Series Month NSE Ticker Price/gm
Series IV February SGBFEB32IV ₹6,263
Series III December SGBDEC31III ₹6,199
Series II September SGBSEP31II ₹5,923
Series I June SGBJUN31I ₹5,926

The price history of SGB for FY 2022-23 is as follows:

Series Month Price per Gram
Series 1 June 2022 Rs. 5,041
Series 2 August 2022 Rs. 5,091
Series 3 December 2022 Rs. 5,409
Series 4 March 2023 Rs. 5,611

The price history of SGB for FY 2021-22 is as follows:

Series Month Price per Gram
Series 1 May 2021 Rs. 4,777
Series 2 May 2021 Rs. 4,842
Series 3 June 2021 Rs. 4,889
Series 4 July 2021 Rs. 4,807
Series 5 August 2021 Rs. 4,790
Series 6 September 2021 Rs. 4,732
Series 7 October 2021 Rs. 4,765
Series 8 November 2021 Rs. 4,791
Series 9 January 2022 Rs. 4,786
Series 10 March 2022 Rs. 5,109

How to Buy Sovereign Gold Bond?

To buy Sovereign Gold Bonds (SGBs) in India, you can follow these steps:

  • Check Issuance Dates: The RBI announces specific issuance dates for SGBs. These dates are when the bonds are available for purchase.
  • Approach Authorized Entities: You can buy SGBs through various authorized entities like commercial banks, designated post offices, the Stock Holding Corporation of India (SHCIL), and recognized stock exchanges such as NSE and BSE.
  • Submit Application: Fill out the application form available with the authorized banks or entities during the issuance period. You'll need to provide details such as your name, address, PAN (Permanent Account Number), and the amount of gold you wish to invest in terms of grams.
  • Payment: Pay the required amount as per the current market price of gold. You can pay through cash, cheque, demand draft, or online banking, depending on the options provided by the specific entity.
  • KYC Compliance: Ensure compliance with KYC (Know Your Customer) norms. You might need to submit identity and address proofs along with the application.
  • Allotment: After the closure of the issuance period, the RBI will allot the bonds. You'll receive an allotment advice and a Certificate of Holding confirming the ownership of the bonds.
  • Interest Payments: SGBs pay an annual interest, which is credited semi-annually to the investor's bank account. The final redemption amount includes the principal along with the accrued interest upon maturity.

How to Buy SGB Online?

Given below are the steps to invest in or buy sovereign gold bonds in India -

  • Step 1. Log in to your net banking account.
  • Step 2. Select the ‘eServices’ option and then choose ‘Sovereign Gold Bond’.
  • Step 3. Read the terms and conditions, then click ‘Proceed’.
  • Step 4. Complete the registration form and click ‘Submit’.
  • Step 5. Enter the subscription quantity and nominee’s details in the purchase form.
  • Step 6. Click ‘Submit’ after providing all the details.

Who Should Invest in Gold Bonds?

Residents in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.


What are the Distinguished Features of Gold Bonds?

Many distinct features of gold bonds make it an attractive investment option, too. Like,

  • It can also earn you a fixed-interest income bi-annually.
  • The expenses for selling and buying this SGB are nominal as compared to the physical gold.
  • The government has also assured that investors would get the market value of gold at the time of maturity.
  • These bonds are free from issues like high making charges and purity.
  • The paper form of gold bonds makes it easy to store and provides safety from being stolen or lost.
  • The bonds can be used as collateral.

What is the Minimum or Maximum Quantity a Person Can Buy Through Gold Bonds?

The minimum quantity that a person can buy is 1 gram. Whereas,

  • In the case of individuals and HUF the maximum limit is 4 Kgs and
  • In the case of others the limit is 20 Kgs.

These limits are to be calculated for all the bonds subscribed during one financial year. In the case of joint holding, the limit applies to the first applicant.


Where Can I buy SGB (Sovereign Gold Bonds)?

Anyone can apply for the bonds through

  • Scheduled commercial banks like ICICI banks and
  • Designated post offices
  • Non-banking financial Company and

National Saving Certificate agent can act as advisors or agents. They would be authorized to collect the application form and submit to banks and post offices. Bombay Stock Exchanges (BSE) and National Stock Exchange (NSE) are included as receiving offices, apart from the commercial banks.


Why Should I Buy SGB Rather Than Physical Gold Under the SGB Scheme?

The reason why one should buy SGB rather than physical gold under the SGB scheme depends upon several factors as follows:

  • The quantity of gold for which the investor pays is protected. As the investor receives the ongoing market price at the time of redemption of such bonds.
  • Also, the SGB offers an alternative to holding gold in physical form.
  • These bonds are free from issues like making charges and purity in the case of gold in jewelry form.
  • The bond is issued by the Reserve Bank of India on behalf of the government.
  • The bonds are also distributed through banks and designated post offices.

What are the Various Advantages of Sovereign Gold Bonds?

  • Absolute safety
    Sovereign gold bonds carry none of the risks that are associated with physical gold, except the market risks because it is in paper form so the risk is less stealing. There is no hefty design charges or TDS. Therefore stealing factor does not come into the picture or change its ownership
  • Extra Income
    In sovereign gold bonds annual interest at the rate of 2.50% (on the issue price). This is the most recent fixed rate as per Reserve Bank of India policy.
  • Indexation benefits
    If someone wants to transfer their bond before maturity, they can get indexation benefits. There is also a sovereign guarantee on the redemption money as well as on the interest earned, this is a major advantage of sovereign gold bonds.
  • Tradability
    It allows you to trade gold sovereign bonds on stock exchanges within a specific date (at the discretion of the issue). For instance, the minimum period is 8 years but after completing 5 years of investment, you can trade them on the National Stock Exchange or Bombay Stock Exchange among others.
  • Collateral
    Some of the banks accept SGB as security against secured loans like ICICI Bank, Kotak HDFC banks, etc.

How SGB (Sovereign Gold Bonds) are Different From Physical Gold Purchases and Gold ETFs (Exchange Traded Funds)?

SGB differs from physical gold and ETF in numerous ways, such as

S No Particulars SGB ETF Physical gold
1 What these schemes mean These are the gold bonds issued in paper form by the government and can later be converted into DEMAT form also. There is no physical gold consorted against such bonds. You can get the payment on maturity and purchase physical gold from market under this option. Gold ETF – are the securities equivalent to gold prices traded over the stock market. These can be purchased by anyone trading online during the trading hours. Can be sold and purchased at the convenience of buyer. No gold is actually taken or given. You can purchase gold by selling the securities and realizing the money. This is what we all have witnessed in our households and society since ages. In this conventional method, actual metal gold is purchased from the market. This is generally stored in form of gold ornaments or articles. With the possession of physical gold, there comes a high risk of theft and keeping it safe.
2 Lock India 8 year but money can be withdrawn at 5th ,6th and 7th year as well No lock-in period can be purchased and sold online anytime. No lock in under this mode too. It can be sold in the open market as per the will of the investor and immediate cash can be realized.
3 Return Returns are generally higher due to periodical interest earned on bonds + lower purchase value because of no making charges Returns are lower than actual gold returns. The reason being loss due to trading charges and taxes for making transactions through stock exchange. Returns are normally lower due to the high making charges involved.
4 Taxability No tax if sold after complete 8 years tenure (Otherwise, Capital gain tax is leviable as per normal provisions) Capital Gains Tax is levied as per the provisions of the Income Tax Act. i.e., LTCG is payable @ 20% after three years Capital Gains tax is levied as per the provisions of the Income Tax Act. i.e., LTCG is payable @ 20% after three years
5 Minimum Purchase Quantity Minimum amount one can buy bonds of shall not be below 1 gram. No minimum purchase quantity has been prescribed Any quantity can be purchased as per the will of purchaser. Even if the same is below 1 gram.
6 Purchase Cost Low as the same is borne by the government. Infact online purchases and digital payment further reduces purchase cost by Rs 50 per gram. In comparison to SGB the purchase cost is high as trading charges, commission and relevant taxes are payable. Highest purchase cost due to huge making charges imposed by the seller.
7 Purity of Gold Highest Highest Lowest
8 Liquidity Least liquid option amongst these three. Because it cannot be sold before 5 years (minimum). High Liquidity because can be sold online during the trading hours. Highly Liquid
9 Collateral Can be kept as collateral Cannot be used as collateral for securing loans Can be used for collateral purposes.
10 Safety of Gold Least risk as to theft because security is hold either in paper or DEMAT form. Risk is negligible due to electronic transfer of traded units. Highest in risk. Resulting from physical possession of the gold metal.

What are the Tax Benefits of Sovereign Gold Bonds?

Regarding capital gains, Sovereign Gold Bonds are redeemed at the end of 8 years. Any capital gains you earn at the end of 8 years will be considered entirely tax-free. The government extends this tax benefit to encourage investors to invest in Gold Bonds instead of physical gold.

However, the tax treatment differs if you exit your Gold Bond investment earlier. There are two popular ways to exit a Gold Bond investment: the first is via the early redemption window at the end of 5 years, and the second is to sell your bonds in the secondary market. In both cases, capital gains will be taxable according to the usual definition of short-term and long-term capital gains. If it is the former, the rate applicable will be at its peak. If it is the latter, then the investor can choose between a flat tax rate of 10% or 20% after considering indexation.

Thus, overall, investing in Sovereign Gold Bonds and holding on until the redemption period is over could result in tax benefits that help you save a considerable sum while filing taxes. Plus, you can easily store your Gold Bonds without having to deal with the worry of storing physical gold.

Furthermore, Sovereign Gold Bond tax benefits occur at three levels. Firstly, you receive interest at the rate of 2.5% on your Gold Bond holdings. This interest is entirely taxable, that too, at the peak rate of tax. Thus, if you are in the 30% tax bracket, you will have to pay tax on whatever interest you earn via Gold Bonds. Note that since tax Deducted at Source (TDS) is not applicable on Gold Bonds, you will have to show this income when you file your returns and pay advance tax accordingly.

Want to know how tax can impact your investment in Sovereign Gold bonds and how you save the maximum, connect with our experts.

Thus, overall, investing in Sovereign Gold Bonds and holding on till the redemption period is over could result in tax benefits that help you save a considerable sum while filing taxes


Taxation On Gold: SGB vs Gold ETF vs Physical Gold

Tax On The Sale Of Physical Gold

If you make a profit selling gold, you might have to pay capital gains tax on the earned profit. The taxation of gold sales is determined by how long you've held it—either as short-term capital gains or long-term capital gains.

Long-Term Capital Gains (LTCG) Tax:

If you sell gold and silver after holding them for more than three years i.e. more than 36 months, you may be subject to long-term capital gains tax. The tax on LTCG on gold and silver is subject to a fixed rate of 20 per cent and a four per cent cess, with the added advantage of indexation.

Short-Term Capital Gains (STCG) Tax:

If you sell gold and silver within three years of purchase, i.e., before 36 months, you may incur short-term capital gains tax. The STCGs are taxed based on the applicable income tax slab rate.

Tax On Sale Of SGBs:

It is the substitute for holding physical gold. You can redeem the bonds after eight years of maturity. However, you can redeem the bonds at the end of five years of purchase, too. The taxation rules are:

Redemption On Maturity i.e., After Eight Years, Is Tax-Exempt

If you redeem within the initial five years, it will be classified as LTCGs. LTCG from SGB is subject to a 20 percent tax rate with indexation benefits or a 10 percent rate without indexation benefits. The interest earned on SGB is not exempt from taxes and is reported as income from other sources.

Tax On Sale Of Gold ETF

The taxation of gold ETFs and gold saving funds purchased before and after March 31, 2023, is distinct, impacting their capital gains treatment:

Pre-March 31, 2023:
Treated and taxed similarly to physical gold.
Qualify as long-term capital assets if held for 36 months or more. Will be taxed at 20 per cent with indexation benefits.
Taxation occurs upon sale or redemption.

Post-March 31, 2023:
Taxed as short-term capital gains regardless of how long you hold it.
Taxation occurs upon sale or redemption.
Will be taxed at slab rates.

Here’s an example to help you understand the investment in different types of physical gold, Gold ETF, and SGB -
Investment amount- Rs 1,00,000
Investment Horizon- 1-year
Annual appreciation in Gold Price-10% [Assumed]
Average Inflation – 5% for the period 5 year [Assumed]
Individual tax slab- 10% [Assumed]

Sovereign Gold Bond Calculation Example

This table shows that if someone wants to invest in any of the three types how much return they can get as we can see from this table physical Gold net profit is 9,000 per annum which is same as Gold ETF but lesser than SGB, which is a 12,500 Net profit per year, not only this it is less risky as compared to physical Gold and Gold ETF.

*No tax has been calculated for SGB, assuming they have been sold after completion of tenure.

Hope this article helped you understand everything that you need to know about sovereign gold bonds. Sovereign gold bonds are not just a great investment but also a popular tax-saving investment option.

However, remember that whether you hold gold in physical form, gold ETF or a sovereign gold bond (SGB), you have to report them in your ITR to claim a tax benefit.

ITR Filing for FY 23-24 has begun, and your can file your ITR yourself in less than 4 minutes with Tax2win’s AI-integrated smart ITR filing software. And if you find taxes complicated, you can also connect with our tax experts and get a CA-assisted ITR Filing Service. File ITR Now!


Frequently Asked Questions

Q- Can a Minor invest in SGB?

Yes a minor can apply though his / her guardian. No direct application can be made in this case.


Q- If I apply, am I assured of allotment?

Yes, if you make all the compliances correctly, you can be sure about the allotment. Such compliances are

  • Meeting the eligibility criteria,
  • Producing a valid identification document
  • Remittance of application money, etc

Q- Can I apply online?

Yes, an online application can be made through the website of the listed scheduled commercial banks. In fact, the subscription can be made at Rs 50 less per gram when it is made online, and the payment is also made through digital mode.


Q- How can I exit my investment in SGB?

For premature withdrawal, investors can file a request before 30 days of the coupon date to the requisite.

  • Banks
  • SHCIL
  • Post Offices
  • Agent etc

The time period can further be reduced on request but shall, in no case, be less than one day before the coupon date. on successful processing of the application, payment would be credited to the registered bank account of the investor.


Q- Can I use these securities as collateral for loans?

SGB can be used at par for taking up of loans, as done in the case of ordinary gold. The loan-to-value ratio will depend on the RBi circulars issued from time to time. SGB can work as eligible collateral for taking up loans form

  • Banks
  • Financial Institutions and
  • Non-Banking Financial Companies (NBFC)

Q- What are the tax implications on i) interest and ii) capital gain?

Interest on the Bonds is taxable as per the provisions of Section 43 of the Income-tax Act, 1961. The capital gains tax on redemption of SGB is exempted for individuals. also, indexation benefit on the long-term capital gain will be available for everyone on the transfer of bond(s).


Q- What are the payment options for investing in the Sovereign Gold Bonds?

Payment can be made in any of the following ways

  • Cash (up to ? 20000)
  • Cheques
  • Demand Draft
  • Electronic Fund Transfer.

Q- What is the procedure to be followed in the eventuality of the death of an investor?

In the eventuality of the death of an investor following two conditions can be encountered

  • A nominee has already been appointed

in this case, the nominee shall approach the Receiving Office to file its claim. The claim will be recognized on the guidelines set under the provisions of the Government Securities Act, 2006.

  • No nominee was appointed

If no nomination has been made then executors or administrators of the deceased investor or holder of succession certificate shall submit their claim to the Receiving Office or Depository.

The same process needs to be followed in the case of minor investors too. But if the resulting beneficiary is minor then the title shall be transferred in the name of a person fulfilling the government’s eligibility criteria.


Q- How can I post my queries regarding Sovereign Gold Bond to RBI?

Reserve Bank of India has given a dedicated e-mail ID, i.e. sgb.rbi.org.in, for the public to ask their queries. You can mail your query to the given mail ID relating to issues on Sovereign Gold Bonds.


Q- 10 Are there any risks in investing in SGBs?

Normally, there are no chances of incurring loss while investing in SGB. But, there might be a scenario when the prices of gold fall over the time period. Even in this situation, a person will not lose in terms of units of gold. The unit of gold purchased at the time of investment will remain the same.


Q- Can I encash the bond anytime I want? Is premature redemption allowed?

The redemption of the bond is done after 8 years from the date of purchase. But premature redemption is allowed from the 5th year itself. In case an investor wishes to liquidate the investment even before 5 years, then the same can be transferred to other eligible persons offline or offline if held in demat form.


Q- At what price the bonds can be purchased?

The prices are announced by RBI with every announcement of the tranche. the nominal price is computed on the basis of a simple average of the closing price of gold of 999 purity. Where the closing prices are published by the India Bullion and Jewelers Association Limited. The last 3 business days of the week preceding the subscription period are to be considered for this calculation.


Q- Who is eligible to invest in the SGBs?

The eligible investors for Sovereign Gold Bonds are

  • Individuals (resident in India)
  • HUFs
  • Trust
  • Universities and
  • Charitable Institutions

Individual investors who occupied SGB at the time of being resident in India can continue to hold SGB till early redemption/maturity.


Q- Can NRI buy Sovereign Gold Bond?

No, NRI, though allowed to invest in all other gold funds and ETFs, cannot subscribe to SGBs. But, if an NRI holds SGB as a result of its earlier status as a resident Indian, then the same is allowed subject to

  • Non-repatriation of interest or maturity amount to India
  • Hold the bonds till early redemption/ maturity

Q- Can SGB be held jointly?

Yes, joint holding is allowed in the case of gold bonds.


Q- Where I can get the application form?

The application form can be taken from any of the following organizations

  • The issuing banks
  • SHCIL offices
  • Designated Post Offices
  • Agents etc
  • Download form from RBI’s website.

Banks may also, depending upon internal policies, provide online application facilities.


Q- What are the KYC norms?

Every application for SGB shall be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s). and the same suffices for the Know Your Customer norms.


Q- Can an investor hold from more than one investor ID for subscribing to the Sovereign Gold Bond?

No. An investor cannot have more than one unique investor ID linked to any of the prescribed identification documents. The same unique investor ID is also to be used for all the subsequent investments in the gold bond scheme. Also, for holding securities in dematerialized form, quoting PAN is mandatory while filling up the application form.


Q- What is the time limit for issue of Holding Certificate?

The Certificate of Holding is issued to the customer on the date of issuance of the SGB itself. The certificate can be collected either from

  • The issuing banks
  • SHCIL office
  • Post Offices
  • Designated stock exchanges
  • Agents or
  • RBI directly on email*

(if email address is provided in the application form.)


Q- What is the selling price of the gold bonds?

The nominal value of Gold Bonds shall be in Indian Rupees. It is fixed on the basis of a simple average of the closing price of gold of 999 purity. The same is published by the India Bullion and Jewelers Association Limited for the last 3 business days of the week preceding the subscription period. A person subscribing online and making payment in digital mode gets a subscription at Rs 50 lower than the actual value for each gram.


Q- Will RBI publish the rate of gold bonds every day?

No, the RBI does not publish gold prices every day. Instead, the price for the relevant tranche is announced on the Reserve Bank of India’s official website two days before the issue opens.


Q- What amount will I get on redemption of SGB?

The redemption value of gold bonds will be based upon the simple average of the closing price of gold of 999 purity, which is to be taken for the previous 3 business days from the date of repayment. It is to be published by the India Bullion and Jewelers Association Limited. The amount will be transferred to the bank account in Indian rupees.


Q- What is the SGB redemption procedure?

To redeem SGB, follow the process mentioned below -

  • The investor shall inform the requisite authority, e.g., bank, post office, etc., about the redemption desired at least 30 days before the coupon date.
  • In case of premature redemption, the application can be filed for later than one day before the coupon date.
  • On successful acceptance of the application, redemption proceeds will be credited to the bank account of the investor.
  • If any changes have taken place in the particulars like bank account number, email IDs, etc, then the investor must inform the bank/SHCIL/PO promptly.

Q- Can SGB be gifted to a relative or friend on some occasion?

If your friend or relative fulfills the eligibility criteria, then these bonds can be gifted or transferred to their names. The transfer procedure shall be governed by the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity. It shall be done by execution of an instrument of transfer. The same is available with the issuing agents.


Q- Whether nomination can be made for these investments?

Yes, a nomination facility is available as per the Government Securities Act 2006 and Government Securities Regulations 2007. A nomination form is attached to the Application form. An NRI can be a nominee and, as a result, can get SGB transferred in his own name but -

  1. The NRI investor will be required to hold the security till early redemption or till maturity; and
  2. The interest amount and maturity proceeds of the investment will not be repatriable.

Q- From where I can find RBI circular on SGB?

You can download all Reserve Bank of India circulars on sovereign Gold Bonds from

https://rbi.org.in/Scripts/BS_SwarnaBharat.aspx


Q- Is tax deducted at source (TDS) done on the sovereign bond?

No, since the redemption on maturity is tax-free no TDS is applicable on the bond. However, the investor shall comply with the tax laws.


Q- What are the charges for prematurely withdrawing SGB?

The redemption price of SGB is calculated based on the average closing price of 999 purity gold, as reported by the India Bullion and Jewelers Association Limited (IBJA) over the three business days leading up to the redemption date. The Reserve Bank of India (RBI) recently established the premature redemption price for Sovereign Gold Bonds (SGB) in the 2017-18 Series IV and 2018-19 Series II tranches. For these specific series, the central bank has determined the premature price to be Rs 7,325 per unit.


CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.