Here is a look at important information about the latest SGB tranche.
SGB 2023-24 Series IV
- Date of Subscription: February 12 – February 16, 2024
- Date of Issuance: February 21, 2024
According to the HDFC Bank, “SGB prices are linked to the price of 999 purity (24k) gold published by the India Bullion and Jewellers Association (IBJA). Since a gold bond is liquid, investors can sell it easily in the secondary market when gold prices rise.”
SGB issue price
“In terms of Government of India Notification F.No.4(6)-B(W&M)/2023 and Reserve Bank press release dated December 08, 2023, the Sovereign Gold Bond Scheme 2023-24 – Series IV will be open for subscription during February 12–16, 2024. The nominal value of the bond based on the simple average of closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. February 07, February 08 and February 09, 2024 works out to Rs 6,263/- (Rupees Six thousand two hundred and sixty three only) per gram of gold. Government of India, in consultation with the Reserve Bank, has decided to offer a discount of Rs 50/- per gram less than the nominal value to those investors applying online and making the payment against the application through digital mode. For such investors, the issue price of Gold Bond will be Rs 6,213/- (Rupees Six thousand two hundred and thirteen only) per gram of gold,” stated an RBI press release dated February 9. 2024.SGB discount
The Reserve Bank of India (RBI) allows Rs 50 discount to investors who register online and pay by digital means a discount. As a result, the issue price of the gold bonds for these investors would be Rs 6,149 per unit, or one gram of gold.
SGB interest rate
The investor receives a fixed interest rate of 2.5%. per annum for the current series payable semi-annually on the nominal value. The fixed interest earned is independent of the capital appreciation of Gold Bonds.
The tenor of the Bond will be for a period of 8 years with exit option in 5th year, to be exercised on the interest payment dates. The Gold Bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognised stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, either directly or through agents.
Benefits of of Sovereign Gold Bond Schemes
Here are some of the benefits of SGB, according to the HDFC Bank website.
- Attractive Interest with asset appreciation opportunity (2.5%)
- Redemption is linked to Gold Price
- Elimination of risk and cost of storage
- Exempt from Capital gains tax, if held till maturity
- Hassle free: Ownership of gold without any physical possession (No risks and no cost of storage)
- Tax treatment: The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
- Tradability: Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
- Transferability: Bonds shall be transferable by execution of an Instrument of transfer in accordance with the provisions of the Government Securities Act.