While the FM in her maiden Budget 2019 speech has announced customs duty hike on gold from 10% to 12.5% to curb imports of physical gold, the government simultaneously has introduced a new tranche of sovereign gold bonds. The issue price of the bond is Rs. 3443 per 10 gm, which works out to be available at a discount of 1.45%, partially offsetting the impact of customs duty hike of 2.5%. For online payment, individuals will get a discount of Rs. 50 per gram.
These bonds track the price of physical gold and customers can apply for SGBs from various banks through their net banking service. SGBs also come with an interest rate payout of 2.5%.
With a tenure of 8 years, SGBs lack liquidity. Nonetheless, investors are allowed to redeem their investments in SGBs pre-maturely after a period of 5 years. Income earned as interest on these SGBs is taxable as per the tax slab of the investor but the capital gains on these bonds at the time of redemption are tax exempt.
An individual can apply for a minimum of 1 gm and a maximum of 4 kgs on a yearly basis.
Notably, if the investor sells these SGBs to another person, the capital gains thus accrued are eligible for indexation.