Sovereign Gold Bond 2023-24: Series 4; Check Price, Issue Dates, and More.

The Sovereign Gold Bond tranche 2023-24 new tranches have been announced.

The Reserve Bank of India (RBI) has launched the Sovereign Gold Bond Scheme 2023-24 Series 4 issuance. The primary subscription for the SGB 2023-24 series 4 will commence in February. The price is fixed in INR based on the average price of the last 3 working days of 999 purity gold published by India Bullion and Jewellers Association Limited (IBJA) before the issue date. Investors applying online and making payments through digital channels get a ₹ 50 discount on the issuance price.

In this blog, you’ll find all the details of SGB tranche 2023-24, series IV, its price, how to buy, and crucial things to know before investing in SGBs. We have also listed the upcoming issue dates of SGB 2023-24.

Sovereign Gold Bond Scheme 2023-24 New Tranche: Key Dates

For Series 4 of SGB 2023-24, the subscription will be from February 12 – February 16, 2024, and the issue date is February 21, 2024. The issue date, i.e. when the units will be allotted to you, is February 21, 2024. The price for SGB 2023-24, series 4 is Rs. 6263 per gram.

The details of the new tranches of SGB 2023-24 are as follows:

SGB Scheme 2023-24 Series 1 & 2

The details of tranches 1 & 2 of the Sovereign Gold Bond, issued in June and September 2023, are as follows:

What is a Sovereign Gold Bond?

Sovereign Gold Bonds (SGBs) are government security issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are issued in denominations of one gram of gold and are linked to the market price of gold.

The RBI annually issued the Sovereign Gold Bond Scheme 2023-24 Series in multiple tranches. Series 1 was released on June 19, and Series 2 on September 11. A discount of Rs. 50 per gram is given on the nominal value to encourage investment in online transactions.

SGBs are a convenient alternative to holding physical gold. They are denominated in grams, with the smallest unit being 1 gram. The face value of the bond is determined based on the average closing price of gold (999 purity) over the last three business days before the subscription period, as published by the Indian Bullion and Jewelers Association Limited (IBJA).

How to Invest in Sovereign Gold Bonds 2023-24?

You can apply for SGB from scheduled commercial banks such as HDFC Bank and SBI, authorised post offices, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL) and stock exchanges including the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) or agents. Buying them from small finance or regional rural banks is not available.

Sovereign Gold Bonds Interest Rate and Returns

The maiden tranche of SGB was issued in November 2015 at Rs 2,684 per unit, and it matured on November 30, 2023, at Rs 6,116 per gram of gold. The approximate return earned by investors was 128%.  In addition to the potential for capital gains, SGBs offer investors a fixed interest rate of 2.5% per annum, which is paid semi-annually.

Please note the returns are not guaranteed as they depend on the price of gold at the time of maturity.

Loan Against SGBs

Sovereign Gold Bonds can be used as collateral when borrowing from financial institutions and non-banking financial companies. The SGB loan-to-value ratio equals the ordinary gold loan prescribed by the RBI. Furthermore, granting loans against SGBs is subject to the decision of banking institutions. The minimum and maximum loan amount also varies from bank to bank. The lending institution will demand the pledge of SGBs in Demat or a physical certificate form as security.

Maximum Subscription Limits for Sovereign Gold Bond

The maximum subscription limit for SGBs varies depending on the type of investor:

• Individuals can invest up to 4 kilograms.
• Hindu Undivided Families (HUFs) can subscribe for 4 kilograms.
• Charitable institutions and trusts can acquire around 20 kilograms of gold per fiscal year.
• In the case of joint investments, the 4-kilogram limit applies only to the first applicant.
• The annual ceiling includes bonds obtained through the initial issuance by the government and those purchased from the secondary market.

Benefits Of Investing In Sovereign Gold Bond Tranche 2023-24 (Series 2)

• Safety and Security: SGBs are issued by the government through the RBI, providing high safety and security for investors.
• Alternative to Physical Gold: SGBs serve as a convenient substitute for holding physical gold. Investors can gain exposure to the price movements of gold without the hassle of storing and safeguarding physical gold.
• Capital Appreciation: Like physical gold, SGBs offer the potential for capital appreciation. If the price of gold rises over time, the market value of the bonds also increases, allowing investors to benefit from price appreciation.
• Fixed Interest Income: SGBs provide a fixed interest rate of 2.5% annually, payable semi-annually. This interest income offers an additional source of earnings for investors.
• Tax Benefits: If held until maturity, the capital gains arising from their redemption are tax-free.
• No Making Charges or Storage Costs: Unlike physical gold, SGBs do not involve making charges or storage costs. Investors can avoid expenses related to making charges and secure storage facilities.

What is the Eligibility to Invest in SGB Scheme 2023-24?

• An Indian resident as defined under FEMA 1999
• Individuals, HUFs, trusts, universities and charitable institutions
• Individual investors with subsequent change in residential status from resident to non-resident may continue holding SGB until early redemption/maturity.

Benefits Of Investing In Sovereign Gold Bond Tranche 2023-24 (Series 3&4)

The following are the benefits of investing in SGBs:

• Safety and Security: SGBs are issued by the government through the RBI, providing high safety and security for investors.
• Alternative to Physical Gold: SGBs are a convenient substitute for holding physical gold. Investors can gain exposure to the price movements of gold without the hassle of storing and safeguarding physical gold.
• Capital Appreciation: Like physical gold, SGBs offer the potential for capital appreciation. If the price of gold rises over time, the market value of the bonds also increases, allowing investors to benefit from price appreciation.
• Fixed Interest Income: SGBs provide a fixed interest rate of 2.5% annually, payable semi-annually. This interest income offers an additional source of earnings for investors.
• Tax Benefits: If held until maturity, the capital gains arising from their redemption are tax-free.
• No Making Charges or Storage Costs: Unlike physical gold, SGBs do not involve making charges or storage costs. Investors can avoid expenses related to making charges and secure storage facilities.

Taxation on Sovereign Gold Bonds 2023-24

The taxation on SGB is as follows:

Tax on interest income

The interest income from Sovereign Gold Bonds is taxable as per the provisions of the Income Tax Act of 1961. The interest income is added to your total income, and the tax is charged per your applicable tax slab.

Tax on Capital Gains

Capital gains refer to the gains you earn due to appreciation in the underlying asset’s price. For example, if you purchased the SGB at the price of ₹45,000 per 10 grams and on maturity the price is ₹47,000/-, then your capital gains are ₹47000 – ₹45000 = ₹2000/-.

In case of redemption before maturity

1. Short-term Capital Gains Tax

If you sell the bond before the completion of 1 year after investment, your gains will be charged as short-term capital gains (STCG) tax. The STCG charged to you will be the same as the income tax slab applicable to you as per your income (including the Short term capital gains).

2. Long-term Capital Gains Tax

If you sell the SGB after 1 year, you are taxed at 10% without indexation benefits or 20% with indexation benefits. Index means that the actual capital gains are calculated after accounting for the bond’s purchase price inflation.

Payment Options for SGBs

When you invest in SGBs, you only need to pay the issue cost in cash (up to a maximum of Rs. 20,000/-), demand draft, cheque, or through electronic banking. Upon maturity, you will receive the market value of gold at that time. Unlike purchasing physical gold, there are no additional charges like GST or charges associated with buying SGBs.

How Can You Check the SGB Status?

There is no guarantee of allotment of SGBs in the primary issue. The units are allotted on a lottery basis. If you subscribed to the bond, the units will be visible in your demat account on the date of allotment. If you invested offline, you can get the investment certificate from the issuing bank, SHCIL offices, Post Offices, Designated stock exchanges, or agents.

Additionally, you will get a digital copy of your investment certificate on your registered email address.

Sovereign Gold Bond Issue Price History

The SGB issue price history for FY 2022-23 is as follows:

The SGB price history for FY 2021-22 is as follows:

How to Redeem the Sovereign Gold Bonds after 8 Years of Maturity?

The Sovereign Gold Bonds have a maturity of 8 years. Once the tenure of 8 years is completed, you will be notified one month before the maturity date. On maturity, the final amount will be credited to your bank account, already mentioned in the certificate. If you have bought the units in demat form, the amount will be credited to your demat-linked bank account, and the units will be auto-debited. 

The redemption price will be determined in INR based on the average price of the last 3 working days of 999 purity gold published by India Bullion and Jewellers Association Limited (IBJA) before the maturity date.

Reference Link

https://ibja.co/

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1984145

Frequently Asked Questions (FAQs)