Sovereign Gold Bond 9th tranche opens for subscription from today: Know 6 golden reasons to invest and other important details

Sovereign Gold Bond 9th Tranche: The ninth tranche of the Sovereign Gold Bonds (SGB) 2021-22 has opened from subscription from today, January 10, 2022. The interested individuals must note that the SGB will be available for subscription till January 14, 2022.

Now, there are certain queries regarding the SGB that the interested investors must know. They are as follows:

What is Sovereign Gold Bond (SGB)?
SGBs or gold bonds are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of the Government of India.

Price of ninth tranche of the Sovereign Gold Bonds (SGB) 2021-22
The Sovereign Gold Bond will be available at a price of Rs 4,786 per gram. Those who will apply online will get a discount of Rs 50 per gram. For such investors, the issue price of the Gold Bond will be Rs 4,736.

Who is eligible to invest in the SGBs?
Those who are residents in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent changes in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

What are the Know-Your-Customer (KYC) norms?
Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s).

What is the rate of interest and how will the interest be paid?
The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

How are returns from gold bonds taxed?
According to RBI, the interest on gold bonds shall be taxable as per the provision of the Income Tax Act, 1961. However, the capital gains tax arising on redemption of sovereign gold bonds at maturity has been exempted.

What is the minimum and maximum limit for investment?
The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions

It must be noted that recently, the State Bank of India (SBI) has tweeted from its official Twitter handle about the golden reasons for investing in SGB. The tweet said, "Here's a golden opportunity! 6 golden reasons to invest in Sovereign Gold Bonds. SBI customers can invest in these bonds on http://onlinesbi.com under e-services. Know more: bit.ly/2O8ESdv."

Here's a golden opportunity!
6 golden reasons to invest in Sovereign Gold Bonds.
SBI customers can invest in these bonds on https://t.co/YMhpMwjHKp under e-services.

Know more: https://t.co/H4BpchASeA#Gold #GoldBond #SGBWithSBI #AzadiKaAmritMahotsavWithSBI pic.twitter.com/inxP0Py8gQ

— State Bank of India (@TheOfficialSBI) January 8, 2022

According to SBI, the six golden reasons behind investing in Sovereign Gold Bond are as follows:

1) The investment assures returns of 2.50 per cent per annum payable half-yearly

2) It is secured and there are no storage hassles like physical gold

3) The liquidity is tradable on exchanges

4) There is no GST and making charges unlike in physical gold

5) It can be also used as collateral for loans

6) There is no Capital Gains Tax on redemption

It has to be noted that the RBI in consultation with the government has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.