Sovereign Gold Bonds - Things to Know Before Investing in Sovereign Gold Bonds

Gold price is rising right now, and investors are looking to use this opportunity to invest in gold. And right now, with the government’s Sovereign Gold Bond Schemes, investing in this widely-loved yellow metal is easier and more convenient.

Right now, the Sovereign Gold Bond Scheme of 2020-2021 is open for investor subscription. If you do wish to take the opportunity, you need to do this within 5 days from today. The RBI has announced in a press release that the government shall be giving these bonds in 6 tranches, starting from October 2020 to March 2021.

The RBI has placed the price of SGB at a rate that varies from tranche to tranche. On its part, the government generally gives a discount for those investors who are applying online. You need to pay digitally against this particular publication. When investing in SGBs through banks, you can make investments through their respective netbanking and mobile banking facilities.

Here are a few things which you need to know before investing in Sovereign Gold Bonds:

1. It is mandatory to provide your PAN number, as per RBI guidelines
2. You have to invest in a minimum of 1 gram gold, while the maximum limit is 4 kg for individuals. For trusts and similar bodies, the upper limit is 20kgs of gold during each fiscal year. The annual ceiling is inclusive of bonds subscribed under various tranches during the initial Government Issue as well as those bought from the Secondary Market.
3. The total tenor of the SGB shall be 8 years. There is an exit option from between 5th and 6th of the 7th year. However, it should be remembered that bonds shall be ready for stock exchanges within 2 weeks of RBI’s issuance date.
4. In case of joint holders, the limit of investment shall be 4 kg of gold, and this shall be applicable to the first applicant only.
5. Before a new issue, RBI will say what the issue price of the bond is. This shall be decided on the basis of the average closing price of gold of 999 purity as published by the RBI for the last three days of the week before the subscription period.
6. These gold bonds shall be issued as Government of India stocks. All investors shall get a holding Certificate. These bonds can be converted into their Demat form.
7. Most banks like ICICI and SBI will accept subscriptions. Investors shall get compensation in the form of a fixed 2.5% per year, payable twice a year on the nominal value.
8. Gold bonds can be used as loan collaterals. The loan to value ratio shall be set on par to the ordinary gold loan as mandated by the RBI.
9. On redemption of the Sovereign Gold Bonds, the capital gains tax for individuals is exempted. Indexation benefits shall be given in case of long-term capital gains by an individual on bonds transfer.

How to Sell Gold In India - Documents needed to Sell Gold

Unless you have been living under a rock, you may have seen the quick rise of gold rate price globally and in India. Sure, even in between it had its ups and downs, but right now it is rallying hard. For the 9th straight day, MCX futures market is seeing a record high. The demand for gold is at an all-time historic high.

This is something seldom seen before. If you want to get some immediate cash, why not sell off the gold which is lying fallow at home anyways? Why not use something which you have not used nor have any plans of using? Right now the money you can get in return for the gold you sell can be considerable. You can get Rs. 52,846 per 10 grams, and that price is steadily rising.

However, just wanting to sell gold is the easy thing. Actually selling it is tough. But here is our advice on how you should go on to sell your gold.

Documents you need for selling gold

Perhaps you thought that you won’t need any documents while selling. That is not the case, although you won’t need to show a bunch of documents either. All you need to show are your PAN card, your Aadhar card, and your purchase bill of your gold if you have it.

 When you undertake to show that the gold actually belongs to you, there is a decrease in chance to sell stolen gold.

In an ideal scenario, if you are selling gold, you should go to the same jeweler from whom who bought the gold originally. In case you do not have that option anymore, go for a reputed jeweler instead. In both cases, you’ll get a fair deal.

Items you can sell are gold coins, gold ornaments, and gold bars that you have purchased from other jewelers. It is even better to get a hallmark certificate, but in case you do not have it, have your gold machine-tested for purity.

Gold purity

If you fear about the purity of your gold, just get it tested at the designated centers in cities. This will give you a bigger chance of getting the best price for your items. Besides, you can also approach NBFCs and gold loan companies. These offer doorstep service which is so useful during the current lockdown situation.

Taxation of non-physical and physical gold if you sell

 If you sell physical gold, there is a short-term capital gains tax if you have held the said gold for one year. In this case, the gain is added to your income tax and you are taxed according to your slab. If you have held the gold for three years, there is 20% tax for LTCG after indexing. For non-physical gold like ETFs and digital gold, the tax treatment is similar, except for SGBs.

For SGBs, the interest income is charged under your Income Tax head income from other sources. There is no TDS or TCS implication. However, no capital gains tax is levied for redemption of SGBs after maturity.

Sovereign Gold Bonds - Things to Know Before Investing in Sovereign Gold Bonds

Gold price is rising right now, and investors are looking to use this opportunity to invest in gold. And right now, with the government’s Sovereign Gold Bond Schemes, investing in this widely-loved yellow metal is easier and more convenient.

Right now, the Sovereign Gold Bond Scheme of 2020-2021 is open for investor subscription. If you do wish to take the opportunity, you need to do this within 5 days from today. The RBI is issuing these bonds on behalf of the Indian Government. Earlier this year in April 2020, the RBI announced that the government shall be giving these bonds in 6 tranches, starting from April 2020 to September 2020.

The RBI has placed the price of SGB at a rate of Rs. 4852/gram.

On its part, the government is giving away a discount of Rs. 50 per gram, less than the normal nominal price for those investors who are applying online. Thus, if you apply online, you get this discount. You need to pay digitally against this particular publication. The Issue price for Sovereign Gold Bonds shall be Rs. 4802/gram. When investing in SGBs through banks, you can make investments through their respective netbanking and mobile banking facilities.

Here are a few things which you need to know before investing in Sovereign Gold Bonds:

1. It is mandatory to provide your PAN number, as per RBI guidelines
2. You have to invest in a minimum of 1 gram gold, while the maximum limit is 4 kg for individuals. For trusts and similar bodies, the upper limit is 20kgs of gold during each fiscal year. The annual ceiling is inclusive of bonds subscribed under various tranches during the initial Government Issue as well as those bought from the Secondary Market.
3. The total tenor of the SGB shall be 8 years. There is an exit option from between 5th and 6th of the 7th year. However, it should be remembered that bonds shall be ready for stock exchanges within 2 weeks of RBI’s issuance date.
4. In case of joint holders, the limit of investment shall be 4 kg of gold, and this shall be applicable to the first applicant only.
5. Before a new issue, RBI will say what the issue price of the bond is. This shall be decided on the basis of the average closing price of gold of 999 purity as published by the RBI for the last three days of the week before the subscription period.
6. These gold bonds shall be issued as Government of India stocks. All investors shall get a holding Certificate. These bonds can be converted into their Demat form.
7. Most banks like ICICI and SBI will accept subscriptions. Investors shall get compensation in the form of a fixed 2.5% per year, payable twice a year on the nominal value.
8. Gold bonds can be used as loan collaterals. The loan to value ratio shall be set on par to the ordinary gold loan as mandated by the RBI.
9. On redemption of the Sovereign Gold Bonds, the capital gains tax for individuals is exempted. Indexation benefits shall be given in case of long-term capital gains by an individual on bonds transfer.