Tag: Sovereign Gold Bond

Three ways to invest in digital gold this Gudi Padwa

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold, considered a symbol of prosperity in Indian culture, is purchased on several auspicious days and occasions. One such day is Gudi Padwa, celebrated on March 22 this year. Also known as Ugadi in South India, this day marks the arrival of the spring season and the New Year for Marathi and Konkani Hindus.

While traditionally, people only bought gold jewellery and coins, of late investors have started purchasing the yellow metal in paper forms. It is said that paper or digital gold serves as one of the best investment options. They also generate good returns and are classified as capital assets for income tax purposes.

Here’s a look at some of the paper gold options to be considered this Gudi Padwa:

Sovereign Gold Bonds (SGBs)

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors must pay the issue price in cash, and the bonds are redeemed in cash on maturity. It is considered a safe way to invest in gold, especially for those with an investment window of 5-8 years.

While the Reserve Bank of India (RBI) issues SGBs multiple times a year and fixes a price for each issuance, users can also buy or sell them in the secondary market.

The bonds bear interest at the rate of 2.50 percent (fixed rate) per annum on the initial investment amount. Interest is credited semi-annually to the bank account of the investor, and the last interest is payable on maturity along with the principal.

Gold ETFs

Gold ETFs allow individuals to invest in gold in a dematerialised format, which can be bought and sold on the stock exchange just like shares. Gold equivalent to physical quantity is deposited in an electronic form, in the purchaser’s demat account.

These are listed on the stock exchange, where one can get real-time updates about their price. ETFs don’t have any exit loads, which means investors can buy or sell the units at any time during market hours.

Gold mutual funds

Gold mutual funds are open-ended funds that invest in gold ETFs or in shares of gold mining companies. Regulated by Sebi, an investor can invest as low as Rs 500 (through a systematic investment plan) or any amount greater than Rs 5,000 as lumpsum. Units of gold funds can be redeemed by selling them back to the fund house based on the net asset value (NAV) for the day.

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Sovereign Gold Bond scheme opens today: Check price, taxability and other details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The fourth tranche (IVth) of the Sovereign Gold Bond (SGB) scheme for 2022-23 opened for subscription on Monday and will be available till March 10. The issue price for the same has been fixed at Rs 5,611 per gram of yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.

Here are key things to know about SGBs:

What is Sovereign Gold Bond (SGB)?

SGBs 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 are redeemed in cash on maturity. These bonds are sold through banks Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges — National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

Who is eligible to invest in the SGBs?

A person resident in India, as defined under Foreign Exchange Management Act, 1999, is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

When SGB matures?

The tenor of the bond is for a period of eight years with an exit option after the fifth year to be exercised on the interest payment dates.

How are SGBs taxed?

The interest on gold bonds is taxable as per the provision of the Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long-term capital gains arising to any person on the transfer of bond.

What kind of investors should opt for SGBs?

According to experts, anyone who is interested in investing in gold or making a Systematic Investment Plan (SIP) can invest in sovereign gold bonds or SGBs. Big investors who want to stay invested in gold can buy up to 4 kgs and retail investors can invest as small as 1 gm.

Experts say that it is a good instrument for investors who want conservative investment tools as SGBs attract an interest rate of 2.5 percent and investors will get the benefit of the increase in the price of gold.

Watch: Chirag Mehta, Senior Fund Manager at Quantum AMC, Peter McGuire, CEO at XM Australia and PR Somasundaram, Regional CEO India at World Gold Council in interaction with CNBC-TV18.

What are the other benefits of investing in SGBs?

With SGBs, investors do not have to worry about the storage of gold as it is in a demat form. It pays interest of 2.5 percent along with the price appreciation which no other gold investment offers.After investing, individuals get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.

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Sovereign Gold Bond available for subscription now — check key benefits, other details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Sovereign Gold Bond 2022-23 Series III tranche is available for subscription now. The price for the SGB is fixed at Rs 5409/gm and subscription window will close on December 23. The date of issuance is December 27, 2022. Online subscribers can secure these bonds at a discount of Rs 50 per gram.

Regarded as a better alternative than holding physical gold, it’s important to understand SGBs and how the instrument works as an investment option.

Who is eligible to invest in the SGBs?

A person resident in India, as defined under Foreign Exchange Management Act, 1999, is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

How can a customer apply online?

A customer can apply online through the websites of the listed scheduled commercial banks. The issue price of the gold bonds is Rs 50 per gram less than the nominal value for investors applying online and the payment against the application is made through the digital mode.

What are the benefits of SGB?

According to Nish Bhatt, Founder & CEO at Millwood Kane International, the primary aim behind issuing these bonds is to make them a substitute for investing in physical gold.

“Meeting demand for physical gold leads to imports, putting pressure on the currency. SGB is an effective alternative to physical gold, it is paper gold. Any investor can invest in gold, without any hassles of storage or related cost, liquidating it is easier than physical gold and the bonus is a 2.5 percent interest coupon payable semi-annually. The same is not available in physical gold,” he said.

The RBI has received a good response from the SGB so far. It has raised a total of over Rs 31,000 crore since its inception in November 2015 as per its annual report. Gold prices have, meanwhile, risen over 11 percent this year, and more than doubled since November 2015.

What is the tax treatment of SGB?

The interest on gold bonds is taxable as per the provisions of the Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long-term capital gains arising to any person on transfer of the bond.

Are there any risks of investing in SGBs?

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold that he has paid for.

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Last chance to buy RBI’s gold bond in 2022 | SGB opens today — Check details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If you want to invest in Sovereign Gold Bond (SGB) in 2022, this could be your last chance. The third tranche of the SGB 2022–23 has opened for subscription today, i.e. on December 19 and will be available till December 23. The date of issuance for the same is December 27, 2022. The issuance price is Rs 5,409 per gramme.  Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning to buy gold this Dhanteras? Here is how to invest wisely

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Buying gold on auspicious occasions such as Dhanteras holds special importance and emotional appeal in India. Over the last few years, several avenues have opened that allow investments in gold apart from buying bullion gold. Some of these options include gold exchange-traded funds, gold savings funds, and sovereign gold bonds (SGBs) which are well-regulated online investment options. If you are planning to buy gold this Dhanteras, here are some interesting investment options for you.

1. Gold ETFs

Investors have the option to buy and sell the units of gold ETFs on the stock exchanges. Over the last 10 years, gold ETFs have given decent returns annually as gold ETFs track the prices of gold and are a good medium-term investment. You must have a demat account to invest in the units of gold ETFs.

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2. Sovereign gold bonds (SGB)

For those looking for a long-term view of gold investments, sovereign gold bonds are a sensible option. SGBs are issued by the Reserve Bank of India on behalf of the Indian Government which makes them a secure investment option. The tenure of SGBs is of eight years, however, there is an option to sell it back to the government after the end of the fifth year. Sovereign gold bonds yield an interest rate of 2.5 percent per annum, and they track the price of one gram of gold. At the time of maturity, investors are paid according to the current price of 1 gram of gold.

3. Digital Gold

In the case of those who want to buy gold with the assurance of purity and safe storage, digital gold is the best option. Several platforms allow investments in digital gold where customers can buy gold and make payments online. After that, the seller stores the gold in secured vaults on the customer’s behalf. Digital gold is redeemable in the form of 24 Karat, 999.9 purest gold coins, and gold bars. However, terms and conditions regarding the purchase, redemption and storage of digital gold vary from seller to seller.

Apart from gold, here are some other great investment options for Dhanteras.

Equity

Investing in equity is the best choice for investors looking for high returns. To invest in equity and maximize returns, one needs to follow a very well-planned investing strategy.

SIPs

Dhanteras also brings a great opportunity to start a SIP which will offer a clearly defined time financial goal.

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Last day to request premature withdrawal of SGB 2016-17 Series IV: How much interest will you earn?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The last day to request for premature redemption or withdrawal of Sovereign Gold Bond Scheme (SGB) 2016-17 Series IV tranche is Friday, September 16. This is because the second due date for the redemption has been fixed for September 17, 2022.

According to the Reserve Bank of India (RBI), the request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. Hence, the last day to request the same is today.

The price for premature withdrawal of the said tranche has been fixed at Rs 5,077 per unit, according to the Reserve Bank of India’s (RBI’s) notification.

How is the redemption price decided?

The redemption price of SGB is based on the simple average of closing gold price of 999 purity of the week (Monday-Friday) preceding the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).

How much will investors earn on this redemption?

SGB 2016-17, Series IV was Rs 2,893 per gram of gold. So, if the investors opt for premature withdrawal, then the absolute return will be 75.49 percent (Redemption price of Rs 5,077 — issue of Rs 2,893)/100).

This will be in addition to the half-yearly interest payment of 2.5 percent on the scheme.

When is premature redemption allowed?

Though the bond’s tenure is eight years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates.

Accordingly, the second due date of premature redemption of the Sovereign Gold Bond Scheme (SGB) 2016-17 Series IV tranche is September 17, 2022, i.e. tomorrow.

How can investors proceed with premature redemption?

In case of premature redemption, investors can approach the concerned bank/SHCIL offices/post office/agent before the coupon payment date.

The proceeds will be credited to the customer’s bank account provided when applying for the bond.

In case there are changes in any details, such as account number, or email ids, then the investor must inform the bank/SHCIL/PO promptly.

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Sovereign Gold Bond scheme opens: Check price, minimum and maximum limit, other details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The second tranche (IInd) of the Sovereign Gold Bond (SGB) scheme for 2022-23 has opened for subscription today, August 22. The issuance of the bond will take place on August 30.

The issue price for the same has been fixed at Rs 5,197 per gram. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.

The issue price of the second tranche sovereign gold bond 2022-23 is based on the simple average value of the closing price published by the Indian Bullion and Jewellers Association (IBJA).

What is Sovereign Gold Bond (SGB)?

SGBs 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 are redeemed in cash on maturity.

Who is eligible to invest in the SGBs?

A person resident in India, as defined under Foreign Exchange Management Act, 1999, is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

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How can one invest in SGB?

Those looking to subscribe to the SGBs in this tranche can apply through banks, Stock Holding Corporation of India Limited (SHCIL), stock exchanges NSE and BSE, designated post offices or through agents.

What are the minimum and maximum limits for investment?

The bonds are issued in denominations of one gram of gold and multiples thereof. Minimum investment in the bond is 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).

When does an SGB mature?

The bond’s tenure is for eight years, with an exit option after the fifth year to be exercised on the interest payment dates.

What is the rate of interest, and how is it paid?

The bonds bear interest at the rate of 2.50 percent (fixed rate) per annum on the initial investment amount. Interest is credited semi-annually to the bank account of the investor, and the last interest is payable on maturity along with the principal.

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Is it the right time to invest in SGB? And what are the trends in gold prices?

Nish Bhatt, Founder and CEO at Millwood Kane International, said that investment in gold through SGB is a decent option as it provides liquidity, doesn’t require any storage cost and is easier to redeem.

“Also, it comes with an interest coupon payable semi-annually,” he said.

“Investment in SGBs has received a robust response. RBI has already raised a total of over Rs 25,702 crore from November 2015 till FY21,” Bhatt said.

On gold prices, he said that the yellow metal is currently trading near a 3-week low, and the softness is largely due to the encouraging economic data set being reported by the US.

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“The strength of the dollar is also one of the reasons for the weakness in gold prices. Gold prices have risen around 8 percent a year to date in rupee terms. Moving forward, gold prices will be guided by the pace of rate hikes and unwinding of liquidity measures by global central banks to contain inflation,” Bhatt said.

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Sovereign gold bond: Key things to consider when buying it from secondary market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investing in gold via sovereign gold bonds (SGB) is a popular way to buy yellow metal in India. Issued by the Reserve Bank of India (RBI), SGBs are available via banks, post offices and stock exchanges.

While the bonds are not issued throughout the year, investors who miss applying can buy them from secondary market too.

Here are the key things to consider before investing in SGBs via secondary market:

Availability

SGBs are issued in tranches and generally open for a period of one week in a month. However, they are always available on the trading platform — which is the secondary market.

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Quantities and prices

When buying from secondary markets, investors must be satisfied with whatever quantities and prices they are being offered, said Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital Ltd while talking to CNBC-TV18.com.

This is because prices and quantities are dependent on the market conditions.

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Maturity and liquidity

The maturity dates may also vary with the lots which are available for sale in secondary market.

“At times, investors may get some good deal on pricing whenever there is some distress sell by some of the old SGB holders. If individuals hold the investment till maturity, that is good. But if they want liquidity in between, they must be prepared to get a discounted price for their holdings. On top of that, investors may also have to wait for sometime before a buyer turns up. Most importantly, they would need DEMAT account for transactions via any of the options,” Bajaj said.

Tax benefits

On holding SGB until maturity, investors can avail of tax benefits. If they sell the holding before maturity, then the taxation will apply as per the period of the holding.

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For eg: If Mr X has held bonds for less than three years, he should be prepared to pay tax at the applicable rates on the gains. But, if he has sold bonds after holding them for at least three years, then he shall be taxed at a lower rate of 20 percent of the gain and that too after applying the indexation benefit.
On the other hand, if he waits till maturity then whatever gain he makes will be completely exempt from tax, Bajaj told CNBC-TV18.com.

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Sovereign Gold Bond: Date of next tranche, benefits of investing, other details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The second tranche (2nd) of the Sovereign Gold Bond (SGB) scheme for 2022-23 will open for subscription on August 22 and will be available till August 26. The issue price for the same will be announced soon.

Regarded as a better alternative than holding physical gold, it’s important to understand the SGB and how it works as an investment option.

Here are the key details an investor should know about the SGB:

What is Sovereign Gold Bond (SGB)?

SGBs 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 are redeemed in cash on maturity.

They are issued multiple times in a year and RBI fixes a price for each issuance. Users can buy or sell SGBs during the tranche or in the secondary market.

Who is eligible to invest in the SGBs?

A person resident in India as defined under Foreign Exchange Management Act, 1999 is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

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How it is sold?

These bonds are sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, according to RBI.

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 is 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 the case of joint holding, the limit applies to the first applicant. The annual ceiling includes bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market.

What are the tenor and exit options?

The tenor of the bond is for a period of eight years with an exit option after the fifth year to be exercised on the interest payment dates.

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What is the rate of interest and how is it paid?

The bonds bear interest at the rate of 2.50 percent (fixed rate) per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor and the last interest is payable on maturity along with the principal.

How can a customer apply online?

A customer can apply online through the website of the listed scheduled commercial banks. The issue price of the gold bonds is 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.

What are the benefits of SGB?

The quantity of gold for which the investor pays is protected since he/she receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.

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It is free from issues like making charges and purity in the case of gold in jewellery form.

What is the tax treatment of SGB?

The interest on gold bonds is taxable as per the provision of the Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long-term capital gains arising to any person on transfer of bond.

Are there any risks of investing in SGBs?

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold that he has paid for.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold ETFs and Sovereign Gold Bonds: Which one to buy and when?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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When it comes to gold investment in India, most financial planners advise investors to buy two assets – Gold ETFs and Sovereign Gold Bonds(SGB). Unlike physical gold, which requires huge money investments, both these instruments are low-cost options to invest in gold. However, the investor will not get any physical possession of the yellow metal if they choose to invest in Gold ETF and SGB. Both the instruments are paper gold held by the investor until she/ he wants to redeem it.

According to investment experts, the two instruments are designed to suit different classes of investors. Those looking to invest in gold for a short term keeping liquidity in focus can opt for Gold ETF, while those who wish to stay invested for the medium or longer term can go for SGB as it offers assured returns and income tax benefits on maturity.

Although both the instruments are a hedge against inflation, gold ETF is better for those who have a small timeframe for investment, Manikaran Singhal, founder at goodmoneying.com, told Mint while speaking on sovereign gold bond vs gold ETF.

Further, from the point of view of liquidity, gold ETF is a better option as sovereign gold bonds have an eight-year lock-in period for those investors who want to avail the tax exemption on capital gains on the maturity amount.

An investor selling SGB after three years but before maturity will have to pay long-term capital gains tax of 20 percent. In case of gold ETF, the gains are subject to capital gains tax when the investor sells it.

Investors have the option of partially withdrawing the funds from SGBs after the 5th, 6th and 7th year. These instruments can be sold in the secondary market.

According to wealth planners, investors should not look at gold as a short-term asset and should invest with a long-term outlook.

“Those who want to trade in gold for a short-term gain should base their allocation purely on individual risk-appetite and knowledge level,” Rahul Agarwal, director at Delhi-based Wealth Discovery, told NDTV Profit, adding that the price trend of the yellow metal over a long period reveals that “gold is a generational asset”.

Those who want to balance their investment portfolio over a longer period of time can opt for buying the precious metal periodically until their allocation reaches 10-15 percent of overall asset portfolio, Agarwal advised. However, the strategy is best not adopted by an average investor as immediate-term gold investments are subject to market volatility.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow