Sovereign Gold Bonds 2023-24 series IV priced at ₹6,263 per gram, issue to open on Monday

The Reserve Bank of India (RBI) has fixed the issue price for the Sovereign Gold Bonds (2023-24 Series IV) at ₹6,263 per gram, according to an official statement released on Friday. The bonds are set to open for subscription for five trading days, from February 12 to February 16, 2024.

The nominal value of the bond is calculated based on the simple average of the closing price published by the India Bullion and Jewellers Association (IBJA) for gold of 999 purity in the last three working days of the week preceding the subscription period, i.e., February 07, February 08, and February 09, 2024.

The Government of India, in collaboration with the RBI, has decided to offer a discount of ₹50 per gram less than the nominal value for investors applying online and making payments through digital modes.

For these investors, the issue price of the Sovereign Gold Bond will be ₹6,213 per gram.

Abhijit Roy, CEO of GoldenPi, highlighted the appeal of Sovereign Gold Bonds (SGBs) for investors seeking to include gold in their portfolios.

SGBs come with an 8-year maturity period and a 5-year lock-in period, providing investors with flexibility. The bonds also offer an annual interest rate of 2.50%, ensuring a steady stream of fixed income.

"Investors can enjoy tax breaks when redeeming SGBs, but capital gains from selling SGBs on the secondary market are subject to prevailing market rates. Additionally, the interest on SGBs is taxed at the individual's applicable tax rate," Roy said.

Unlike physical gold, SGBs eliminate the need for storage and offer significant tax efficiency advantages. Physical gold requires a three-year holding period for capital gains treatment, while SGBs provide a more tax-friendly option.

The SGBs are sold through scheduled commercial banks (except small finance banks, payment banks, and regional rural banks), Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, National Stock Exchange of India and Bombay Stock Exchange.