The Indian government is set to issue two tranches of Sovereign Gold Bonds (SGBs) in the coming months, aiming to tap into the growing interest in gold investments. The subscription for the 2023-24 Series III is scheduled from December 18 to December 22, 2023, with the issuance date set for December 28, 2023. The 2023-24 Series IV will open for subscription from February 12 to February 16, 2024, and will be issued on February 21, 2024.

 

Here are key points to consider before investing in these SGB series:

1. Channels of Sale: SGBs will be available through Scheduled Commercial banks (excluding Small Finance Banks, Payment Banks, and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges such as the National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

 

2. Eligible Investors: The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.

 

3. Denomination: SGBs will be denominated in multiples of grams of gold, with a basic unit of one gram.

 

4. Tenor: The tenor of the SGB will be eight years, with an option of premature redemption after the fifth year.

 

5. Subscription Limit: The maximum limit of subscription is set at 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts and similar entities per fiscal year. This ceiling includes SGBs subscribed under different tranches and those purchased from the secondary market during the fiscal year.

 

6. Pricing Mechanism: The price of SGBs will be fixed in Indian Rupees based on the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. Investors subscribing online and paying through digital mode will enjoy a discount of ₹50 per gram on the issue price.

 

7. Interest and Compensation: Investors will receive a fixed rate of 2.50% per annum, payable semi-annually on the nominal value.

 

8. Taxation: The interest on SGBs is taxable as per the provisions of the Income Tax Act, 1961. However, capital gains tax arising on redemption is exempted for individuals, and indexation benefits will be provided for long-term capital gains.

 

9. KYC Norms: Know-your-customer (KYC) norms for SGBs are the same as those for the purchase of physical gold. Applicants need to submit KYC documents such as Voter ID, Aadhaar card/PAN, or TAN/Passport, along with the PAN number issued by the Income Tax Department.

 

This move aims to provide investors with a secure and accessible means to invest in gold, catering to diverse investor profiles.