The Sovereign Gold Bond 2020-21 Series VII will remain open for subscription from October 12-October 16. Now this series is set to open at a time when India is set to welcome its festivals this year. Here are a few points that you need to note if you are considering subscribing to this series of SGBs.
1. Issue Price:
The issue price for this series has been fixed at Rs. 5051 per gm of gold. And this is very close to the 24K gold price which on October 12, 2020 is quoting at Rs. 50550 per10 gm. So, for 1 gm of SGB, investor will have to shell out just Rs. 5001 i.e. even lesser in comparison to the previous issue.
2. Additional Interest pay-out:
Physical gold and several other forms of investment into gold are non-interest yielding but this SGB mode introduced to channelize household savings into financial gold investment provides 2.5% interest per annum payable half-yearly.
3. Experts take on the current series:
Experts hold that the current pricing of gold is only temporary and the downside could be a good entry point. Infact this is said given the bullish outlook for gold and high net worth investors are being advised to pull their savings from deposits and deploy into SGBs.
4. No capital tax implication on redemption at maturity:
These SGBs carry a 8 year maturity time frame but redemption can be made after completion of the fifth year on the interest payment date. And if the redemption is made on maturity then capital gains realized do not arise any tax implication.
Though on a year to date basis, gold has given gains of over 28%, there is still steam left in the yellow metal given the economic and geo-political crisis globally. So, even HNIs looking at garnering better post tax return can invest their capital in SGBs for likely gains in the future.