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The subscription for the tenth tranche of SGBs is now open between January 11 and 15. Sovereign gold bonds are opened for subscription by the Reserve Bank of India in various tranches during a financial year.

The interest for the ninth tranche is fixed at 2.5% per annum and you do not get physical gold delivery after redemption. 

The issue price of the current tranche has been fixed at Rs 5,104 per gram.

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As usual, there will be a discount of Rs 50 per gram for those who invest online.

The issue price for the previous tranche which was open between  December 28, 2020, and January 1, 2021 was Rs 5,000 per gram.

As we can see in the table below, SGBs can be bought on the following dates only. RBI opens up a window of five days each.

S. No. Sovereign gold bond tranche Date of Subscription Date of Issuance Issue Price (per gm)
1. 2020-21 Series I April 20-24, 2020 April 28, 2020 4639
2. 2020-21 Series II May 11-15, 2020 May 19, 2020 4590
3. 2020-21 Series III June 08-12, 2020 June 16, 2020 4677
4. 2020-21 Series IV July 06-10, 2020 July 14, 2020 4852
5. 2020-21 Series V August 03-07, 2020 August 11, 2020 5334
6. 2020-21 Series VI August 31-September 4, 2020 September 08, 2020 5117

 

Sr. No. Tranche Date of Subscription Date of Issuance Issue Price ( per gm)
1. 2020-21 Series VII October 12 – 16, 2020 October 20, 2020 5051
2. 2020-21 Series VIII November 09 – 13, 2020 November 18, 2020 5177
3. 2020-21 Series IX December 28 2020 – January 01, 2021 January 05, 2021 5000
4. 2020-21 Series X January 11-15, 2021 January 19, 2021 5104
5. 2020-21 Series XI February 01- 05, 2021 February 09, 2021
6. 2020-21 Series XII March 01- 05, 2021 March 09, 2021

What are Sovereign Gold Bonds (SGB)?

SGBs are issued by the Government of India but are managed and supervised by the Reserve Bank of India (RBI). SGBs are basically government securities that are backed by gold. They are a substitute for holding physical gold. Forms of physical gold are coins, bars, jewelry among others.

Investors get an opportunity to invest in SGBs in tranches.

What Does SGB Tranche Mean?

Government issues gold bonds for sales in portions and intervals. One such interval is called a tranche and a tranche is open for a maximum of 4-5 days. You can apply for gold bonds online through various portals between the subscription period.

What are the Main Characteristics of Sovereign Gold Bonds?

Tenure and lock-in: SGBs have a term of eight years with a lock-in period of five years. The exit options for SGB are available in the 5th, 6th and 7th year and the option needs to be exercised on the interest payment dates. 

Returns: There are two ways you can earn money through sovereign gold bonds. One way is through an interest rate that is payable every six months. The interest rate is fixed by the government at 2.5% per annum. You may also get some capital gains at the time of redemption if the price rises by then.

Tax Treatment

As discussed above, there are two types of returns in gold bonds and both are taxed differently.

Interest: The interest earned during a financial year is clubbed with the investor’s annual income and taxed according to the applicable income tax slabs.

Capital gains: If an investor holds the bond until maturity (8 years), then the capital gains earned do not attract any capital gains tax. 

If you redeem the bond prematurely, the tax treatment is a bit different.

For more details on this, read more on Groww: Tax Implications of Buying Sovereign Gold Bonds (SGBs)

How can You Invest in Gold Bonds

Sovereign gold bonds are available in the primary and secondary market. 

Primary Market: These bonds are available in offline and online modes. brokerage firms, net banking apps of almost all banks, designated post offices are some of the popular online/offline modes of payment.

Secondary Market:  Gold Bonds are also tradable on stock exchanges within a fortnight of the issuance which becomes the secondary market.

For more details on this, read more on Groww: How to Invest or Buy Sovereign Gold Bonds Online

Conclusion

SGB s was an initiative started by the central government in November 2015. The government, through SGBs, wanted to provide an alternate medium to invest in gold, other than physical forms and futures and options commodity training. RBI keeps a sovereign gold bond tranche open for five days. Investors can subscribe within the subscription period. There are 12 tranches scheduled for the current financial year. Gold bonds help investors to have some exposure towards god as a commodity without having to actually physically own it. However, before investing in SGBs, you need to be cognizant of your goals and requirements, considering the lock-in period, tenure and other characteristics of SGBs.

Should you have any other questions on SGBs, please refer to the Sovereign Gold Bond (SGB) Investment FAQs

Happy Investing!

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