Sovereign Gold Bonds open for subscription: Important dates, price, discount, other key things to know

Sovereign Gold Bond (SGB) opened for subscription on Monday, June 19. SGBs are government-backed and RBI-issued bonds linked to the market price of the yellow metal. The gold bond scheme will be available for five days, till Friday, June 23. The current series will be followed by a second tranche in September.

Here are 10 things to know about the Sovereign Gold Bond scheme, including the gold bond price, important dates, discount and income tax implications: 

Sovereign Gold Bond scheme: Price

The current series will be available at Rs 5,926 per unit. Each unit of the gold bond scheme is equivalent to one gram of gold.

SGB: Important dates

The gold bonds will be available for subscription for five days, from Monday, June 19 to Friday, June 23. The bonds will be issued on June 27. 

Is there any discount on gold bonds?

A discount of Rs 50 per unit applies to those investing in gold bonds through digital modes. Therefore, the price after the discount will be Rs 5,876 per unit. 

Do gold bonds come with a lock-in period?

Sovereign gold bonds come with a maturity period of eight years.

Is there a premature withdrawal option?

SGBs come with a premature exit option available after the first five years of investment.

Gold bonds offer the dual benefit of market return & interest

In addition to a market-linked return, the government-backed gold bond scheme also yields interest at the rate of 2.5 per cent per annum, payable on a semi-annual basis. 

Who can buy gold bonds? 

Resident individuals, Hindu undivided families (HUFs), trusts, universities and charitable institutions can invest in the scheme.

Is there any investment limit applicable to SGBs? 

Investors can buy a minimum of one unit of the gold bonds. A maximum limit is placed at four kilograms (4,000 units) per financial year for individual investors as well as HUFs, and 20 kilograms (20,000 units) for trusts and other such entities.

Where to buy gold bonds?

The bonds are available at commercial banks (except small finance banks, payment banks and regional rural banks), the Stock Holding Corporation of India, the Clearing Corporation of India, designated post offices, and stock exchanges NSE and BSE.

Income tax implication

The interest earned through the scheme is taxable but eligible for indexation benefits. The capital gains arising from the redemption of gold bonds are exempted from the capital gains tax provided the investment is held till maturity.

Should you subscribe to Sovereign Gold Bonds?

"It seems a perfect time to buy SGBs and add gold as a strategic asset. Prices are seen consolidating after a sharp advance, and expectations that the US Fed is nearing the end of its rate hike campaign amid receding inflationary pressures are likely to act as a tailwind for gold while suppressing the rival dollar index. As central banks around the world are buying up gold in record amounts, the precious metal is looking increasingly attractive as a safe haven investment. Besides, lingering concerns of a global economic slowdown engineered by elevated interest rates will keep gold prices buoyant from a medium- to long-term perspective," Sugandha Sachdeva, Executive Director and Chief Strategist at Acme Investment Advisors, told Zeebiz.com.

"Though short-term volatility cannot be ruled out, the long-term outlook for the precious metal remains fairly constructive, where it is envisioned to edge higher towards Rs 65,000 and then Rs 68,000 per 10 gm mark from a long-term perspective," she said. 

How is the SGB price calculated?

The price of the bonds is calculated by taking a simple average of the closing price of gold (999 purity) published by industry body India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding the subscription period. Read more on how SGB rate is calculated