- Safest :- Zero risk of handling physical gold
- Earn Interest :- 2.75% assured interest per annum on the initial investment
- Tax Benefits :- No TDS applicable on interest. Indexation benefit if bond is transferred before maturity. Capital gain tax exempt on redemption.
- Assurance of purity :- RBI will announce the price before the issue date which will be fixed on the previous week’s simple average of closing price of gold of 999 purity published by IBJA
- Sovereign guarantee :- Both on redemption amount and on the interest
- Easy exit option :- The tenure of the bond is for 8 years with an option to redeem from 5th year onwards on the date on which interest is payable.
- Ease of borrowing loan :- Can be used as collateral for loans
- Traded on Exchange :- Tranche 1 trading commenced from June 13, 2016 onwards
Instrument is good for investors who wants to invest in physical gold. Also for those clients who are holding Gold ETF, it is advisable to shift their holding.
Till date Government has completed 3 tranches starting from December’15. All the 3 tranches were distributed through Post Office, Banks. From this time onwards, recognized stock exchanges can distribute SGB through their registered Members.
Sovereign Gold Bond 2016-17 will be open for subscription from July 18 to 22, 2016. The issue price of the Sovereign Gold Bond has been fixed at Rs. 3119/- (Rupees Three Thousand One Hundred and Nineteen only) per gram of gold. The rate has been fixed on the basis of simple average of closing price of gold of 999 purity for the week July 11 to 15, 2016 as published by the India Bullion and Jewellers Association Ltd. (IBJA).
For your reference, attached herewith FAQ, Product note on SGB which explains advantages to invest in SGB.
Please refer RBI Circular – RBI/2016-17/18 IDMD.CDD.No.2020/14.04.050/2016-17.
RBI Press Release