Sovereign Gold Bond (SGB)

SGBs, or Sovereign Gold Bonds, are debt securities that are issued by the Reserve Bank India (RBI). SGBs are a more suitable alternative to investing in physical gold because with SGBs you get to :

SGB v/s Physical Gold Returns



Why SGB?

Particulars SGB Physical Gold
Interest 2.5% p.a. No
0% on Capital Gain tax at Maturity Yes No
Saleable on Stock Exchange Yes No
Safety High Risky
Expense Cost No Yes

About SGBs

(1) About SGB

(2) How to Apply


SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of physical gold etc.
There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
Yes, joint holding is allowed.



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