A Quick Take on RBI’s Sovereign Gold Bond Scheme ‘22-23

The Reserve Bank of India’s (RBI’s) Sovereign Gold Bond (SGB) Scheme 2022-23—the subscription for which closes on December 23, 2022—is a substitute for physical or digital gold. 

The SGBs are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in the bond could be one gram with a maximum limit of subscription of four kilograms for individuals and Hindu-Undivided Family (HUF) and 20 kg for trusts and other such entities.

The maturity period of the bonds is for eight years. However, an investor has an option of premature redemption after the fifth year that can be exercised on the date on which interest is payable.

An investor in gold bonds, which fall under the category of debt funds, will be compensated at a fixed rate of 2.50% per annum payable every other year on the nominal value.

The capital gains an investor makes from SGBs, if held up to maturity, are tax-free. However, in case one redeems SGBs between five and eight years, the gains are considered long-term capital gains (LTCGs) and taxed at 20.8%, including cess with the indexation benefit.

SGBS can be bought and sold over the stock exchange. In case SGBs are sold before three years, the capital gains are added to the investor’s income and taxed based on the applicable income tax slab. The capital gains earned by investors on selling SGBs over the stock exchange after three years are long-term and taxed at 20% with an indexation benefit.

The SGBs 2022-23 Series IV will open for subscription from March 06-10, 2023.

You May Also Like

Save Your Tax By Claiming Medical Expenditure Under Section 80D

The current financial year is near to end on 31st March. You…

Senior Citizens: PMVVY or SCSS investment scheme, which one is best?

Due to a fall in the interest rates offered on fixed deposits…

EPFO lowers the interest rate on PF deposits to 8.5% for FY 2019-20

The Employees’ Provident Fund Organisation (EPFO) has notified the interest rate for…