The ninth tranche (Series IX) of the Sovereign Gold Bond (SGB) scheme for 2021-22 has opened for subscription today. The issue price for the same has been fixed at Rs 4,786 per gram of the yellow metal. Online subscribers can, however, secure these bonds at a discount of Rs 50 per gram.
This subscription of bonds will close on January 14, 2021.
According to Nish Bhatt, founder and CEO, Millwood Kane International,
SGB is an efficient way for investors looking to take
exposure in gold.
"There is no storage cost, taxes in SGB as is the case in buying physical gold. Paper gold has a higher redemption value and can be easily used to take loans against it. SGB comes with a 2.5 percent coupon attached and tax advantage for its investors," Bhatt said.
Speaking further, Bhatt said that the scheme has been a huge success for the government, as it is evident in the fact that the government managed
to raise over Rs 32,000 crore since its inception in 2015.
"Currently, gold prices are trading near a 2-month low.
Gold prices are almost Rs 9,000/10 gm down from their peak witnessed in 2020. The weakness is mainly due to the minutes of the US Fed that indicated a faster rate hike and also a reduction in bond buying than earlier estimated. Going forward, the pace at which the global central banks will unwind their monetary position, movement of the US dollar will guide gold prices in the year 2022," he said.
Those looking to subscribe to the
SGBs in this tranche can apply through banks, Stock Holding Corporation of India Limited (SHCIL), stock exchanges NSE and BSE, designated post offices or through agents.
The tenure of the bond is eight years with an exit option after the fifth year to be exercised on the interest payment dates.
The interest on gold bonds is taxable as per the provision of the Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long-term capital gains arising to any person on the transfer of bond.
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