Current Scenario when the pandemic has caused significant disruption with :
→ Falling interest rates: have reduced the returns from Fixed Income Instruments
→ Equity markets plunged significantly due to panic selling caused after spread of COVID-19 & thereafter have continued to be volatile
→ Gold gets attractive as an investment class when equity & debt markets are volatile
All of this leaves Gold in a sweet spot
Why invest in Sovereign Gold Bonds :
Returns: Interest of 2.5% on the Issue Price & which is payable of half yearly basis + Appreciation of Gold
Safety: Sovereign Guarantee on redemption of Money (Principal) as well as on the interest earned
Elimination of risk and hassle-free holding as it eliminates cost of Storage as in physical gold
Liquidity: Tenure of 8 years with exit options in fifth, sixth & seventh year
Tradeable on stock exchanges from the date to be notified by RBI
Taxation Benefit: Exemption from Capital Gains Tax on redemption.
No TDS Applicable on Interest paid
Indexation Benefit: Will be provided on LTCG arising to any person on transfer of bond
Collateral: Accepted as collateral – Can be kept as collateral / security against Secured Loans
Disclaimer: Please consult your Tax consultant for Taxation purposes..
Risks associated with investing in Sovereign Gold Bonds :
→ Gold is traditionally a very safe investment & typically the risk associated with Sovereign gold bonds is very low
→ However, given the fact that gold rates depend on market performance, any drop in gold rates could put the capital at risk, which would be the case even if one owned physical gold
→ Regardless of market rates, an investor should take solace in the fact that the amount of gold he purchased doesn’t change
Eligibility for Investing in Sovereign Gold Bonds :
→ Resident Individuals, HUFs, trusts, universities & charitable institutions
→ Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB
→ Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
Indexation Benefit: Will be provided on LTCG arising to any person on transfer of bond
Collateral: Accepted as collateral – Can be kept as collateral / security against Secured Loans
Disclaimer: Please consult your Tax consultant for Taxation purposes..
Risks associated with investing in Sovereign Gold Bonds :
→ Gold is traditionally a very safe investment & typically the risk associated with Sovereign gold bonds is very low
→ However, given the fact that gold rates depend on market performance, any drop in gold rates could put the capital at risk, which would be the case even if one owned physical gold
→ Regardless of market rates, an investor should take solace in the fact that the amount of gold he purchased doesn’t change
Eligibility for Investing in Sovereign Gold Bonds :
→ Resident Individuals, HUFs, trusts, universities & charitable institutions
→ Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB
→ 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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