The first gold bond of 2024, SGB Series 2023-24 Series IV, is scheduled to open for subscription on February 12, 2024. Interested investors have the opportunity to subscribe until February 16, 2024, with the official issuance set for February 21, 2024. The Reserve Bank of India (RBI) manages the sovereign gold bond issuance on behalf of the central government.
Key Highlights of the First Gold Bond of 2024
- First gold bond of 2024, SGB Series 2023-24 Series IV.
- Subscriptions open from February 12 to 16, 2024.
- Issuance on February 21, 2024.
- Taxable interest as per Income Tax Act, 1961.
- 8-year tenor with an option of premature redemption.
- Prices are fixed based on the average gold closing price.
- Capital gains tax is exempted on redemption.
- Available through banks, SHCIL, CCIL, post offices, and stock exchanges.
Features and Tenure of Sovereign Gold Bond (SGB)
The Sovereign Gold Bond (SGB) has a tenure of eight years, allowing for premature redemption after the fifth year.
Who should invest in SGB 2023-24 Series IV?
- Investors seeking gold exposure without physical possession hassles.
- Investors aiming for tax benefits, including capital gains exemption.
- Individuals prefer the assurance of government guarantee with no default risk.
Features of SGB
- 8-year tenor with exit option from the 5th year on interest payment dates.
- SGBs are issued in the denomination of units of one gram of gold, with a minimum investment of one gram.
- Maximum limits: 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts per fiscal year.
- Issued by the RBI- Reserve Bank of India on behalf of the Government of India.
- Available in both DEMAT and paper form.
- These gold bonds are transferable through the execution of an instrument of transfer.
- Issue and redemption prices fixed in Indian Rupees based on gold closing prices.
- Loans against bonds are available as collateral security.
Pricing Mechanism of SGBs and Income Tax Rules
SGB prices are set in Indian Rupees using the average closing price of 999-purity gold, as reported by IBJA- India Bullion and Jewellers Association Limited in the three days before subscriptions.
Taxation of Sovereign Gold Bonds
If you hold the bonds until maturity, completing the full eight years, you are exempt from paying capital gains tax on the resulting profits.
For gains obtained by selling or transferring the bonds before maturity, taxation follows applicable rules. Long-term capital gains may benefit from indexation.
Backed by the Government of India, these bonds offer a secure investment. Additionally, they can serve as collateral for loans from various financial institutions and banks.
Acquisition Channels for SGBs 2023-24 Series IV
Interested buyers can acquire SGBs through various channels, including Scheduled Commercial banks (excluding the Payment Banks, SFBs- Small Finance Banks, and Regional Rural Banks), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges in India, i.e., NSE- National Stock Exchange of India Limited and BSE- Bombay Stock Exchange Limited.
Update on SGB 2023-24 Series III
In a related update, the Reserve Bank of India (RBI) has established the issue price for the third tranche of the SGB- Sovereign Gold Bond Scheme, SGB 2023-24 Series III, at ₹6,199 per gram. This tranche was open for subscription from December 18 to December 22, with the issuance taking place on December 28.
Conclusion
SGB 2023-24 Series IV is a great opportunity for investors who want to invest in gold without the hassle of physical possession, storage, or purity issues. The bond offers a fixed interest rate, tax benefits, and a government guarantee. The subscription window is open from February 12 to 16, 2024, and the issuance date is February 21, 2024.
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.