When there is economic volatility, geopolitical uncertainty, or depreciation in the value of fiat currencies, gold tends to outperform other asset classes. Sovereign gold bonds have provided an alternative for investors, particularly millennials, who want to invest in gold but don't want to deal with the hassle of buying physical gold.
In consultation with the Reserve Bank of India, the Government of India has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in six tranches between May and September 2021.
The first tranche of the Sovereign Gold Bond Scheme 2021-22 will be available for subscription on May 17, according to a statement released by the Finance Ministry on Wednesday.
The bond will be sold directly or through agents through commercial banks, the Stock Holding Corporation of India Limited (SHCIL), designated post offices, the National Stock Exchange (NSE), and the Bombay Stock Exchange (BSE).
Sovereign Gold Bond Scheme 2021-22 Series I-VI Dates
|Tranche||Date of Subscription||Date of Issuance|
|2021-22 Series I||May 17-21, 2021||May 25, 2021|
|2021-22 Series II||May 24-28, 2021||June 01, 2021|
|2021-22 Series III||May 31-June 04, 2021||May 31-June 04, 2021|
|2021-22 Series IV||July 12-16, 2021||July 20, 2021|
|2021-22 Series V||August 09-13, 2021||August 17, 2021|
|2021-22 Series VI||August 30-September 03, 2021||September 07, 2021|
Sovereign Gold Bond 2021-22
Sovereign Gold Bond can be purchased by Residents, HUFs, Trusts, Universities, and Charitable Institutions.
Sovereign Gold Bond Tenure
The bond will have an eight-year tenor, with an option to exit after the fifth year on the next interest payment dates. If held in Demat form, the bond will be tradable on exchanges. It can also be transferred to another investor who meets the criteria.
Sovereign Gold Bond minimum and maximum limit
The minimum investment in the Bond is one gram, with a maximum subscription limit of four kilograms for individuals.
Sovereign Gold Bond interest rates
On the amount of the initial investment, the Bonds pay 2.50 percent (fixed rate) per year in interest. Interest will be credited semi-annually to the investor's bank account, with the final interest due along with the principal at maturity.
Benefits of Sovereign Gold Bond
When you buy gold jewellery, you have to be concerned about its security. It's possible that you'll have to pay for storage in a bank locker. The risks and costs of storage are eliminated with this type of bond.
The Reserve Bank of India (RBI) issues these bonds on behalf of the government. This also means that the scheme has the support of the federal government. As a result, these bonds are more secure than buying gold.
You pay charges that cannot be refunded upon re-sale when you purchase gold jewelleries. However, with SGB you don't have to worry about charging or making gold.
If you invest in a sovereign gold bonus, the government in India has exempt capital gains tax on the acquisition of gold. However, the interest earned is taxable. You can use indexing to lower the capital gain tax burden by trying to transfer (leave) the bond before maturity.
Upon maturity, you will be paid out and given cash to the sovereign gold bonds. The redeemable price is based on the average gold closing price of 999 purity published by RBI, the Indian Bullion and Jewelers Association Limited, for the preceding three business days from the day of payment.