In a strategic move to channelize domestic savings into financial instruments, the Government of India has launched the Sovereign Gold Bond Scheme 2023-24 (Series III). Stemming from the inaugural scheme in November 2015 under the Gold Monetisation Scheme, this initiative aims to reduce the demand for physical gold. Open for subscription from December 18 to December 22, the scheme introduces a digital discount for online applications, enhancing the accessibility and attractiveness of secure gold investments to a diverse investor base.
Digital Advantage for Investors
Investors opting for online applications and utilizing digital payment modes will benefit from a ₹50 discount per gram, reducing the issue price to ₹6,149 per gram during the subscription period.
Accessible Investment Options
Sovereign Gold Bonds (SGBs) are available for purchase by resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions. Denominated in multiples of grams, the minimum investment is set at one gram of gold, ensuring accessibility for a broad spectrum of investors.
Flexible Tenor and Redemption Options
Featuring an eight-year tenor, investors have the flexibility of premature redemption after the fifth year. The redemption price will be determined based on the simple average of the closing price of 999 purity gold, providing a predictable exit strategy for investors.
Subscription Limits and Joint Holdings
Individuals and HUFs are limited to a maximum subscription of 4 kg per fiscal year, while trusts and similar entities have a higher limit of 20 kg. In cases of joint holdings, the 4 kg limit applies to the first applicant.
Payment Options and Interest Rates
Investors can make payments through cash (up to ₹20,000), demand draft, cheque, or electronic banking. The fixed interest rate of 2.50 percent per annum, payable semi-annually, ensures a stable return for investors.
Collateral for Loans and KYC Documentation
SGBs are eligible as collateral for loans, subject to loan-to-value ratios applicable to ordinary gold loans. Know-your-customer (KYC) documentation aligns with standard procedures for the purchase of physical gold, requiring documents such as Voter ID, Aadhaar card/PAN or TAN/Passport.
Tax Benefits and Tradable Nature
While interest on SGBs is taxable, individuals enjoy exemption from capital gains tax upon redemption. Long-term capital gains on SGB transfers also qualify for indexation benefits. Additionally, SGBs are tradable, providing liquidity to investors.