Buy Sovereign gold bonds
Sovereign gold bonds or s are a variant of government securities denominated in gold, generally in grams. As opposed to an investment in pure, physical gold, s are more reliable and preferred and hence are deemed the perfect alternative. Any investor opting to invest in s benefits from capital appreciation. Besides this, they also earn annual interest, which further adds to the benefits.
Sovereign gold bonds
The scheme is an investment program offered by the Reserve Bank of India. According to it, individuals can invest in gold in a safe and secure manner. Some of its most salient features include varied investment limits, fixed rate of interest, exemption from capital gains tax if redeemed at maturity, etc.
Benefits of Sovereign gold bonds
Investing in bonds comes with numerous benefits. Here are some of the most prominent ones:
Hassle-free: One of the most significant advantages of investing in s is that it is easily accessible, and the process of investing is hassle-free. Since the process is accounted for and managed by the Reserve Bank of India, investments offer individuals an easy way to invest in gold without worrying about holding physical gold. Almost all major banks, including ICICI bank, HDFC bank, SBI bank, etc., offer individuals the option to invest in s online. Hence, the process is significantly simplified for the majority of people who wish to make a safe and reliable investment. Moreover, it facilitates investors to own gold without physically possessing it.
Tax treatment: As mentioned earlier, the standard tenure of s is 8 years. Investors have the option to redeem their investments early, i.e., opt for redemption at the end of the 5th, 6th, or 7th year. However, individuals who wish to maximize their investment’s value can lock it in for the entire tenure. Doing so will exempt the capital gains tax, resulting in better profits.
Features of Sovereign gold bonds
Here are some of the most prominent features of s:
Eligibility: As per the scheme, the bonds are readily available for Indian entities, including individual investors, trusts, universities, charitable institutions, etc. Another category of investors may need to visit their respective bank branch and follow the standard procedure to apply for the tranche.
Denomination: When it comes to the denomination of s, they are generally denominated in units and multiples of one gram of gold.
How Works
How are s taxed?
Gold bonds feature a maturity period of 8 years. Any investor who holds it till maturity is exempt from paying taxes, i.e., the capital gains earned will be tax-free. However, premature redemption or withdrawal is possible from the fifth year.
Anyone wishing to redeem their s before the maturity date must approach their respective bank, stock-holding company, or the concerned individual at least 30 days before the coupon payment dates. If any investor wishes to redeem their investment after the 5th year, the gains will be taxed at 20% post indexation.
Where can I buy s?
Numerous banks offer individuals the option to invest in s. Most of them, including prominent names like ICICI bank, SBI, HDFC, etc., offer people the convenience of investing in s using the net banking option. The procedure of purchasing s online is mostly similar in the case of all leading banks.
Who can invest in ?
As stated under the Foreign Exchange Management Act of 1999, individuals residing in India are eligible to invest in s. Moreover, other similar entities eligible to invest in the scheme include HUFs, trusts, universities, and other financial and charitable institutions.
How can I Invest Online in ?
Any individual or eligible entity who wishes to invest in s online can apply through the official websites of the listed scheduled commercial banks. Some of the most popular banks which offer users the option to purchase s online are ICICI bank, State Bank of India, HDFC bank, etc. Besides this, s are also issued by certain post offices, stock exchanges, etc.
The price of gold bonds will be Rs. 50 less than their nominal value. The payment for the purchase of said bonds will be made through digital mode.
When will the customers be issued Holding Certificate?
Any individual or eligible entity who invests in s is provided with an official holding certificate. The customers are given said certificate on the date the gets issued to them.
There are two ways of obtaining the holding certificate. Investors can either collect their holding certificates from the issuing bank, post office, designated stock exchange company, etc., or obtain it directly from RBI by emailing. The email address where individuals need to send the email is stated in the application form.