Investment in Sovereign Gold Bonds (SGB)
Sovereign Gold Bond Scheme was launched by Govt in November 2015, under Gold Monetisation Scheme. Under the scheme, the issues are made open for subscription in tranches by RBI in consultation with GOI. The rate of SGB will be declared by RBI before every new tranche by issuing a Press Release.

Features
• The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.

• The tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.

• 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.

• In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.

• RBI will issue Press Release stating issue price of the Bond before new Issue. Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited (IBJA) for the last 3 business days of the week preceding the subscription period.

• Payment for the Bonds will be through cash payment (up to a maximum of Rs. 20,000/-) or demand draft or cheque or electronic banking.

• The Gold Bonds will be issued as Government of India Stocks under Government Security Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into Demat form.

• The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 working days published by IBJA.

• Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

My Rupee Mantra’s Advice
Benefits of investing in Sovereign Gold Bonds:
1. Fixed Interest Rate as declared by RBI.

2. Capital Appreciation:
The SGB provides an opportunity to benefit from the price fluctuation of gold and capital appreciation.

3. Transparency:
The bond is issued by the RBI on behalf of the Government of India, making it a transparent and trustworthy investment option.

4. Cost-effective:
Since it is a paper-based instrument, the SGB eliminates the risk and cost of storage, making charges, and GST, making it a cost-effective investment option.

5. Tax Benefits:
According to the Income Tax Act of 1961, the interest accrued from the bonds is subject to taxation. However, the capital gains tax arising on the redemption of SGBs to an individual is exempted. Indexation benefits will be provided for long-term capital gains arising to any person on transfer of the SGB.

6. Liquidity:
The bonds can be traded over stock exchanges, making them a liquid investment option. Premature redemption is also allowed after the fifth year.

7. Collateral:
In case of an emergency, the bonds can be used as collateral for securing loans, with the same loan-to-value ratio applicable to physical gold loans.

8. Joint Holding:
The bonds can be purchased jointly, and buying the SGB in the name of a minor along with a guardian is also allowed.

My Rupee Mantra’s Role

It is essential for a client to diversify investment portfolio with various asset classes. “My Rupee Mantra” experts recommend including 5% to 10% of gold investment in your portfolio because it is a highly liquid investment option that can effectively diversify your portfolio.

Gold has historically been considered a safe haven asset. Investing in gold can help a client hedge his portfolio against risks.

Sovereign Gold Bonds offer a convenient and cost-effective way to invest in gold compared to physical gold.

Our Experts provide recommendations to invest a portion of your portfolio in SGB based on your risk appetite, time horizon, and investment objectives.