Sovereign Gold Bond 2023-24 (Series 2): Price, Benefits, Issue Dates
The Sovereign Gold Bond tranche 2023-24 Series 2 has been announced.
The Reserve Bank of India (RBI) is set to launch the Sovereign Gold Bond Scheme 2023-24 Series 2 issuance. The primary subscription for these bonds will commence on September 11 and remain open until September 15, 2023. The price will be 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 get all the details of SGB tranche 2023-24 series 2, its price, how to buy, and crucial things to know before investing in SGBs. Further, we have also listed the upcoming issue dates of SGB 2023-24.
Sovereign Gold Bond Scheme 2023-24 Series 2
The details of SGB tranche 2023-24 series 2, issued in September 2023, are as follows:
|Name of the issue||Sovereign Gold Bond Scheme 2023-24|
|Date of subscription||September 11- September 15, 2023|
|Date of SGB 2023-24 issue||September 20, 2023|
|Price||₹ 5,923/- For investing online, ₹ 5,873/-|
|Tranche||2023-24 Series II|
The issue price was determined by calculating the simple average closing price of the last 3 working days of 999-purity gold as published by the Indian Bullion and Jewellers Association. The SGBs will be issued on September 20, 2023, meaning the bond units will be allotted to you on this date.
“Gold is one of the safest asset classes and is a hedge against inflation. Hence, it is good to diversify 5-10% investments in gold. SGB is one of the most convenient and tax-efficient ways to invest in digital gold. It is also apt for those willing to accumulate gold for making jewellery a few years later instead of buying and storing physical gold,” said Ajinkya Kulkarni, Co-Founder and CEO, Wint Wealth.
SGB Scheme 2023-24 Series 1
The details of tranche 1 of the Sovereign Gold Bond, issued in June 2023, are as follows:
|Name of the issue||Sovereign Gold Bond Scheme 2023-24|
|Date of subscription||June 19 – June 23, 2023|
|Date of issue||June 27, 2023|
|Price||₹ 5,926/- For investing online, ₹ 5,876/-|
|Tranche||2023-24 Series I|
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 issued the Sovereign Gold Bond Scheme 2023-24 Series in multiple tranches annually. 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).
Where to Purchase the 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
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.
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.
Sovereign Gold Bond Issue Price History
The SGB issue price history for FY 2022-23 is as follows:
|Series||Month||Price per Gram|
|Series 1||June 2022||Rs. 5,041|
|Series 2||August 2022||Rs. 5,091|
|Series 3||December 2022||Rs. 5,409|
|Series 4||March 2023||Rs. 5,611|
The SGB price history for FY 2021-22 is as follows:
|Series||Month||Price per Gram|
|Series 1||May 2021||Rs. 4,777|
|Series 2||May 2021||Rs. 4,842|
|Series 3||June 2021||Rs. 4,889|
|Series 4||July 2021||Rs. 4,807|
|Series 5||August 2021||Rs. 4,790|
|Series 6||September 2021||Rs. 4,732|
|Series 7||October 2021||Rs. 4,765|
|Series 8||November 2021||Rs. 4,791|
|Series 9||January 2022||Rs. 4,786|
|Series 10||March 2022||Rs. 5,109|
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 to hold SGB till early redemption/maturity
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.
Taxation on Sovereign Gold Bonds 2023-24
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. E.g., if you purchased gold at the price of ₹45,000 per 10 grams and now the price is ₹47,000/-, then your capital gains are ₹47000 – ₹45000 = ₹2000/-.
There is an exemption from paying Capital Gains Tax in case you redeem the SGB with RBI (on behalf of the government)
In case of redemption before maturity
- 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).
- 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 real capital gains are calculated after accounting for inflation in the bond’s purchase price.
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.
Loan Against Bonds
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.
Frequently Asked Questions (FAQs)
Who issues SGBs?
The RBI issues the Sovereign Gold Bonds on behalf of the Government of India.
Is TDS applicable on the Sovereign Gold Bond scheme 2023-24 Series 2?
TDS is not applicable on Sovereign Gold Bond tranche 2023-24 Series 2, however there will be tax on STCG according to income slab and LTCG of 20%+ indexation benefits if sold before maturity. SGBs held till maturity are tax exempt.
What are the risks involved in SGB investment?
The main risk in investing in Sovereign Gold Bonds (SGBs) is the fluctuation of gold prices. However, no risk is associated with the interest earned, as the Government of India (GOI) guarantees it. Furthermore, the quantity of gold held as part of the investment remains secure.
Can non-residents of India invest in SGB 2023-24 (Series 2)?
A Non-Resident Indian cannot invest in Sovereign Gold Bonds as per the Foreign Exchange Management Act (FEMA), 1999. However, an NRI who has already invested in SGB before receiving his NRI status can hold the bond until its maturity or demand premature redemption.
Is it good to invest in SGB tranche 2023-24?
Whether you should invest in SGB in 2023 depends on your investment objectives. Here are some factors worth considering:
Your risk tolerance – While SGBs are generally considered a secure investment option, it’s important to note that the price of gold can also fluctuate.
Your investment goals – SGBs can be an investment avenue for individuals aiming to save on taxes while earning guaranteed returns.
Gold price – It’s essential to consider the gold value when making an investment decision regarding SGBs. Gold prices are high now. If you believe that the future trajectory of gold prices may experience an uptrend, it might be prudent to invest in SGBs now.
Evaluating these factors will help determine whether investing in SGBs aligns with your situation and objectives.
Can I sell a sovereign gold bond at any time?
Yes you can sell gold at anytime. If you want to redeem your SGBs in the first five years, the only way is through a stock exchange mechanism. After 5 years you have the option of either giving back your SGBs to the RBI or selling it in the secondary market.
Is sovereign gold bond scheme a good investment?
Sovereign gold bond scheme 2023-24 is a good investment to earn fixed returns while saving taxes.
What is the average return of a sovereign gold bond?
The return on SGB is a 2.5% interest in addition to the capital appreciation.
Is a demat account needed for buying sovereign gold bonds?
If you want to buy sovereign gold bonds through your broker you will need a demat account. However, if you want buy SGBs offline from banks or post office, you wont need a demat account.
Is a sovereign gold bond better than SIP?
SIPs have substantial amount of risk involved due to market volatility, but their returns are usually higher. SGBs on the other hand are considered to be lower risk instruments with fixed returns.
Can SGB be converted to physical gold?
No, you cannot convert sovereign gold bonds to physical gold. The bonds are available in digital or paper format only. You can sell and convert them to cash and use the money to buy physical gold.
Can I buy SGB every month?
Yes you can buy SGB every month, but the total SGB bought in a year should not exceed 4kgs.