Sovereign Gold Bond Scheme 2023-24: Key Information and Features

The Sovereign Gold Bond (SGB) Scheme 2023-24, announced by the Government of India, offers individuals and eligible entities an opportunity to invest in gold in a convenient and secure manner. The SGBs are issued by the Reserve Bank of India (RBI) on behalf of the government, serving as an alternative to physical gold investments. Here are the essential details and features of the SGB Scheme 2023-24.

1. Eligibility: The SGBs are available for purchase to the following categories:

• Resident individuals
• Hindu Undivided Families (HUFs)
• Trusts
• Universities
• Charitable Institutions

2. Denomination: The SGBs are denominated in multiples of grams, with the basic unit being one gram of gold.

3. Tenor: The maturity period for SGBs is eight years. However, investors have the option of premature redemption after the fifth year, which can be exercised on the date when the interest is payable.
4. Investment Limit: The minimum permissible investment limit is one gram of gold. The maximum subscription limits for different entities are as follows:

• Individuals: 4 kilograms per fiscal year (April-March)
• HUFs: 4 kilograms per fiscal year
• Trusts and similar entities: 20 kilograms per fiscal year

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It’s important to note that these limits are subject to government notifications and include SGBs purchased from different tranches and the secondary market during the fiscal year.

5. Issue Price: The issue price of the SGBs is determined in Indian rupees based on the simple average of the closing price of gold with 999 purity. This average is calculated for the last three working days of the week preceding the subscription period. Investors who subscribe online and pay through digital mode receive a discount of Rs 50 per gram on the issue price.
6. Redemption Price: Upon maturity or premature redemption, the redemption price of the SGBs is determined in Indian rupees based on the simple average of the closing price of gold with 999 purity for the previous three working days, as published by the India Bullion and Jewellers Association Limited (IBJA).
7. Interest Rate: Investors in SGBs are entitled to a fixed interest rate of 2.50 percent per annum, payable semi-annually on the nominal value.
8. Tax Treatment: The interest earned on SGBs is taxable as per the provisions of the Income Tax Act, 1961 (43 of 1961). However, the capital gains tax arising from the redemption of SGBs by an individual is exempted. Additionally, indexation benefits are provided for long-term capital gains on the transfer of SGBs.
9. Collateral and Loan-to-Value Ratio: SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio applied to SGBs will be in line with the ordinary gold loan requirements mandated by the RBI.

10. Issuance and Trading: SGBs are sold through various channels, including scheduled commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges such as the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.

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