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What are Sovereign Gold Bonds?

Sovereign Gold Bonds (SGBs) are Government securities denominated in grams of gold. Issued by Reserve Bank on behalf of Government of India, SGBs offer returns that are directly linked with Gold returns plus offer 2.50% p.a. interest on investment value.

In terms of Pricing, SGBs follow a very transparent pricing* of Gold both during Investment and Maturity and come with the highest purity of Gold denoted by ‘999 purity’.

SGBs are issued in Demat making it a completely hassle-free, secure and a cost effective mode of holding Gold. Not only this, SGBs are Liquid as well as are listed on Stock Exchanges** plus are the most tax efficient^ modes of Gold investing.

Additionally, Collateral facility can also be availed against SGBs.

All this features make SGBs, one of the most prudent forms of investing in Gold. Add Sovereign Gold Bonds to your portfolio now.

SGB SCHEME 2020-21 SERIES XI Issue Price* : To be Notified

Issue Opens-FEBRAURY 01, 2021 Issue Closes-FEBRAURY 05, 2021

Steps to apply Online in Sovereign Gold Bond through ICICIdirect.com

  • Login Icon Login to your ICICIdirect.com account
  • FD/Bond Icon Go to FD/Bonds -
    GOI Issuance
  • Sovereign Gold Bond Icon Sovereign Gold Bonds
  • Apply Icon Apply

Features & Benefits of Sovereign Gold Bonds

Sovereign Gold Bond

Zero Holding Cost & Risk

Sovereign Gold Bond

Tradeable on Stock Exchanges**

Sovereign Gold Bond

Tenor of 8 years; Option to exit after 5th yr

Sovereign Gold Bond

No TDS on Interest

Sovereign Gold Bond

Securely Held in Demat form

Sovereign Gold Bond

Can be used as Collateral for Loan

Sovereign Gold Bond

Capital Gain Opportunity as Returns are linked to Gold Price

Sovereign Gold Bond

Sovereign Guarantee on Redemption Amount & Interest Payment

Sovereign Gold Bond

No Capital Gain Tax if Held to Maturity

Sovereign Gold Bond

Invest between 1 gram to 4kgs in a financial year

Sovereign Gold Bonds v/s Physical Gold and Gold ETFs

Feature Sovereign Gold Bonds Physical Gold Gold ETF
Fixed Interest 2.50% p.a. payable half-yearly No Interest No Interest
Capital Gain Tax ‘0’ Capital Gain tax on redemption^
Interest taxed as per slab
Short Term: Before 3 years, as per marginal slab
Long Term: After 3 years, 20% with indexation
Liquidity / Exit option Can be traded on NSE/BSE** &
Redeemed from 5th year
Restrictive Tradable on stock exchanges
Expenses / Cost No charges in primary issues &
No annual expense
Making charges, Storage cost Recurring annual expenses
Purity Highest purity denoted
by IBJA as ‘999’
Remains questionable High as it is Demat form
Safety High Risk of theft & wear/tear High

Sovereign Gold Bonds Upcoming Issues

Tranche Date of Subscription Date of Issuance Issue Price*
2020-21 Series XI February 01 to February 05, 2021 February 09, 2021 To be Notified
2020-21 Series XII March 01 to March 05, 2021 March 09, 2021

*Nominal value of the Bonds shall 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 for the last three business days of the week preceding the subscription period. The issue price of the Gold Bonds will be Rs. 50 per gram less than the nominal value to those investors applying online and the payment against the application is paid through digital mode.
^^Annual investment limit of 4 kgs will include the SGBs purchased from the secondary market for Individuals & HUF; 20kgs for Trust and similar entities
^Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.
** Subject to Liquidity

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All that glitters is Gold!

Listen to Podcast by Sachin Jain, Research Analyst, ICICI Securities