Sovereign Gold Bond (SGB)
Sovereign Gold Bonds (SGBs) are government-backed securities denominated in grams of gold. They offer an attractive alternative to physical gold investment, combining the benefits of gold price appreciation with a fixed annual interest. SGBs are a secure, cost-effective, and tax-efficient way to invest in gold without the hassle of storage or purity concerns.
These bonds not only provide capital appreciation linked to the market price of gold but also offer an annual interest payout, making them a dual-benefit investment. SGBs have a tenure of eight years with an exit option after the fifth year, and the capital gains at maturity are tax-free, enhancing their appeal for long-term investors seeking stability and wealth preservation.
Why Invest in Sovereign Gold Bonds?
Assured Interest: Earn a fixed 2.5% annual interest on the initial investment in addition to potential gold price appreciation.
Tax Benefits: Capital gains on redemption are tax-free, and interest is taxable as per income slab.
No Storage Hassles: Avoid the risks and costs associated with storing physical gold.
Tradable on Exchanges: SGBs can be traded in the secondary market, providing liquidity options.
Government Backed: Issued by the Reserve Bank of India on behalf of the Government of India, ensuring credibility and security.
Key Features of SGB
Denomination: Issued in multiples of 1 gram of gold.
Tenure: 8 years with an exit option from the 5th year onwards.
Interest: 2.5% p.a. paid semi-annually.
Eligibility: Resident individuals, HUFs, trusts, universities, and charitable institutions.
Mode of Holding: In demat or physical certificate format.