Sovereign Gold Bond

What Is Sovereign Gold Bond?

Sovereign Gold Bond Schemes are government protection designated in grams of gold. They are alternatives for holding physical gold. Shareholders have to recompense the issue price in cash, and the bonds will be reclaimed in cash on maturity.

A sovereign gold bond scheme (SGB) is circulated to resident Indian bodies by the Reserve Bank of India (RBI) for the sake of the central government. This is an elongated form of market instrument.

The government issued the sovereign gold bond scheme in November 2015 with a target to decrease the demand for physical gold and shift a part of the domestic savings employed for buying gold into financial savings. The government offers SGBs in fractions for limited periods.

The Benefits of Sovereign Gold Bond

The sovereign gold bond scheme delivers a substitute for keeping gold in a physical form, and the menaces and prices of storage are eradicated. Investors are guaranteed the market value of gold at the time of majority and periodical interest.

These bonds don’t oblige making charges, integrity, and value-added tax in the case of gold in jewelry form. They are maintained in the demat form for mitigating trading, thus eradicating the risk of loss of note, among others.

SGB holders get similar cash at maturity eight years later, which is tax-free. No taxes are enforced on the revenue from SGBs if redeemed at maturity.

Bonds are beneficial in terms of immaculate investment products. During the pandemic-involved lockdowns, SGB was a simpler option to invest in gold without obtaining the physical form of gold when jewelry outlets were closed.