Sovereign gold bond

Hi everyone
I hav around 10lakh to invest in gold. I will completely invest in sgb because its risk free and rbi regulate it. I am confused should I purchase the bonds which are trading in market or new series. As sgb series trading in market are at lower price. If i bought them will i get 2.5% return per year & main question will it be completely tax free after maturity period.
Thanks in advance 😃
 

ShavirB

Founder
Staff member
Though the issue trading in market may seem cheaper then the new issue, but you must remember with the new issue you will get 8 years of interest (2.50%). For example - if you're buying a 3 year old bond, you would've missed 3 years of annual interest on that Bond. You need to incorporate that into account before making your decision.

To answer your 2nd question, the returns on SGBs will be completely tax free if held till maturity (total 8 years from the date of issue).
 

Mayur

KF Ace
Hi everyone
I hav around 10lakh to invest in gold. I will completely invest in sgb because its risk free and rbi regulate it. I am confused should I purchase the bonds which are trading in market or new series. As sgb series trading in market are at lower price. If i bought them will i get 2.5% return per year & main question will it be completely tax free after maturity period.
Thanks in advance 😃
Bro its Totally depends new bonds issue if new Interest rate is high then defiantly floating bond rate will go down, and vise versa so sit and calculate total interest you get at the end and then take decision. 😇
 

Tax with Ria

KF Expert
Hi everyone
I hav around 10lakh to invest in gold. I will completely invest in sgb because its risk free and rbi regulate it. I am confused should I purchase the bonds which are trading in market or new series. As sgb series trading in market are at lower price. If i bought them will i get 2.5% return per year & main question will it be completely tax free after maturity period.
Thanks in advance 😃
Hello sir,
Your decision to invest in SGB is applaudable.
Answer to your query is that
1.Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). However, The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond, which will also give substantial savings on tax.
2.TDS is not applicable on the bond.
3.On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
4. I would always suggest you to buy the new series of RBI bonds.
 

Tax with Ria

KF Expert
Also, feb SGB issue was from 12feb to 16 feb. New issue might be expected on mid of the year. Wait for the official notification
 

Skylar

KF Mentor
Upto what amount it will be tax free ?
The tax is applicable only on the 2.5% interest they provide, and this applies if you fall under any tax bracket. There is no tax on the amount you receive after 8 years. However, if you withdraw the funds before 8 years or trade them in a demat account, you are liable to pay taxes.
 

AV$

KF Expert
How we can invest in SGB
All major bank apps (ICICI, HDFC, Kotak etc) give you the option to invest in SGB. (except SBI, you'll have to use SBI net banking)
Or if you already own a demat account zerodha, upstox, groww all give option to buy SGB and get it directly in your demat account.
If you buy SGB via your bank you can either hold SGB just in certificate form or while applying you can give your DP id to get it directly in your demat account.
But if you don't use this facility while buying, after that it is bit of a tiring process.
 

zacobite

KF Mentor
Hi everyone
I hav around 10lakh to invest in gold. I will completely invest in sgb because its risk free and rbi regulate it. I am confused should I purchase the bonds which are trading in market or new series. As sgb series trading in market are at lower price. If i bought them will i get 2.5% return per year & main question will it be completely tax free after maturity period.
Thanks in advance 😃
bonds in the market are generally available for lower price for 3 reasons 1) If the seller needed money and is trying to exit 2) If the current bond is issued at a lower rate 3) If the annual interest for that year has already been collected and is not due for 10-12 months
 

AV$

KF Expert
What is brokerage charges on this
Buying SGB from banks has no charges

Buying SGB (new) from zerodha has no brokerage charges

Buying SGB (old) from zerodha must also have zero brokerage charges because you are basically buying and holding it like shares in delivery (I've not bought SGB from secondary market listing personally so can't give you exact charges) but it may have other charges like transaction charges, gst, stamp charges, dp charges etc both when buying and selling.
 
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