What are the advantages of the sovereign gold bond?

If you are looking for information on sovereign gold bond chances are high that you already spend your days searching up metrics like gold rate today Adilabad or for whichever place you live in. Click here to learn more. But sovereign gold bond has some interesting details that separate it from the other forms of investment in gold. 

So what exactly are sovereign gold bonds?

Sovereign Gold Bond, launched by the Government of India is the safest and most convenient way to invest in gold. The investment in this bond is denominated in grams of gold, the investor can buy and sell the bonds at the prevailing market price. Sovereign Gold Bond offers an opportunity to invest in gold without buying physical gold.

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The bond will be sold directly by RBI through scheduled commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The bonds will be sold on payment of money either in cash or by debit to a bank account.

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The minimum permissible investment is 1 gram with a maximum limit of subscription of 500 grams per person per fiscal year subject to a maximum limit of subscription of 4 kg for individuals and Hindu Undivided Family(HUF).

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  • The Bond is issued by the Reserve Bank of India on behalf of the Government of India and hence, it is considered a virtually risk-free investment instrument.
  • The Sovereign Gold Bond comes with a fixed maturity period of 8 years which saves you from the hassle of selling physical gold from time to time as and when you need money for meeting your personal financial goals. So with sovereign gold bonds you won’t find yourself tracking today gold rate Tiruvannamalai or for any other place and preparing extended reports on the prices. 
  • The tax benefit on Sovereign Gold Bond Investment makes it a lucrative investment option. All the investors opting for Sovereign Gold Bonds are given two types of tax benefits; interest earned on the bond is exempted from tax and also, and no TDS is applicable on the interest. This means that all the amount earned as interest on the sovereign gold bond will be exempt from tax.
  • Long term capital gains arising on redemption to an individual have been made exempt from income tax provided that the bond is held till maturity. Indexation benefits can be available while calculating long term capital gain (if held more than three years)
  • Loan against SGB: Banks are allowed to accept sovereign gold bonds as collateral for loans 
  • You are not required to pay any making charges or showroom charges when you buy physical gold.
  • Another benefit that you get by investing in Sovereign Gold Bonds is that these bonds are indexed to inflation. This means that there will be an increase in the cost of the precious metal with an increase in inflation or a rise in the price index. Hence, you can enjoy increased returns on your investment due to indexation benefits.
  • Assurance of Purity: RBI will announce the price based on a simple average of the closing price of 999 purity gold published by the Indian Bullion and Jewellers Association (IBJA) for the previous week (every Monday) which will be fixed as “Issue Price”. Hence, You don’t need to face the problems associated with handling physical gold such as melting and purity checking etc.

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