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Limited period offer ends August 26, 2022

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SGB Scheme 2022-23 Series II

Price

5,147
Rating Sovereign

Return

Gold Linked

Interest

2.5% p.a.

Tenure

8 Yrs

Minimum Quantity

1 Unit

Tax on Capital Gain*

0%

Gold performance in the last 40 years

features

~10%

average annual return

features

30

Years of positive return

features

4%

Higher than average inflation

Historical annual returns of Gold (1980-2020)

SGB_standalone_graphimg

The best way to invest in Gold – learn why!

Reasons to choose SGB Sovereign Gold Bonds Gold ETF Physical Gold
2.5% Interest p.a. over and above gains in Gold value
0% Capital Gain Tax at Maturity*
Held securely in your Demat account
No Expenses (eg., making or holding costs)
999 purity guarantee

FAQs

SGBs are Government Securities denominated in grams of gold. They are substitutes for holding physical gold. The Bond is issued by Reserve Bank on behalf of Government of India.

Price of the Bonds (nominal value) 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 Jewelers Association Limited for the last three business days of the week proceeding the subscription period. The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value to those investors applying online.

"The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the bond shall be one gram with a maximum buying limit maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities per fiscal year as notified by the government from time to time provided that

a. annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and

b. the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions."

Yes. An individual can buy 4Kg worth of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis.

The maximum limit will be applicable for the first applicant in case of a joint holding for the specific application.

SGB will be issued in either demat mode. The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding will be sent directly to e-mail ID from RBI, if the e-mail ID is provided in the application form.

The interest of 2.50% p.a. will be credited semiannually to the registered bank account and the last interest will be payable on maturity along with the principal.

The bonds will get matured after a period of 8 years. Premature redemption can be done from the 5th year onwards.

"On maturity, the redemption proceeds will be equivalent to the prevailing market value of grams of gold originally invested in Indian Rupees. The redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. The option of taking the physical delivery of gold is not available in case of these bonds."

Both interest and redemption proceeds will be credited to the registered bank account number furnished.

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

The bond can be gifted/transferable to a relative/friend/anybody who fulfills the eligibility criteria (as mentioned at Q. no. 4). The Bonds shall be transferable in accordance with the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.

"Premature redemption of these bonds is allowed only upon completion of 5 years from the date of allotment and this can be done only on the interest payment dates which is twice a year. Capital gains tax arising out of redemption of these bonds has been exempted which makes it a more lucrative investment opportunity from the longer term perspective when compared with other forms of gold.

However, in case if you wish to exit from these bonds before the completion of 5 years, you also have the option to trade these bonds in the secondary market. We understand that listed bonds at times have limited liquidity which may result in volatile prices. Hence, for the benefit of our customers we only allow limit orders to be placed. In case if these are traded in the secondary market upon completion of 3 years, capital gains arising would be taxed @20% with indexation benefit and in case if these are traded within 3 years the gains would be taxed at the marginal tax rate, which is the tax rate in which an investor falls."


**Source ICICIdirect Research Report available on website dated May’21
* if held to maturity

Disclaimer:


ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing.