Sovereign Gold Bonds 2023-24 Series IV subscription now open

The Reserve Bank of India (RBI) recently opened the subscription period for Sovereign Gold Bonds (SGBs) 2023-24 Series IV, allowing investors to secure their investment in gold. In this article, we will delve into the details of this investment opportunity, exploring key aspects such as issue price, interest rates, eligibility, and the advantages of investing in SGBs.

Issue Details

The subscription period for SGBs 2023-24 Series IV commenced on February 12 and will close on February 16, with the bonds scheduled to be issued on February 21, 2024. The issue price, set by the RBI at Rs 6,263 per gram of gold, reflects a simple average of the closing price of gold with 999 purities in the preceding three working days, as published by the India Bullion and Jewellers Association. Investors subscribing online and paying through digital modes enjoy a discounted issue price of Rs 6,213 per gram.

Interest Rates and Tax Benefits

SGBs offer a fixed interest rate of 2.50% per annum on the initial investment amount, credited semi-annually to the investor’s bank account. The interest payout is tax-deductible, providing a unique advantage over physical gold investments. Additionally, the capital appreciation at maturity is tax-exempt, enhancing the overall tax efficiency of the investment.

Eligibility and Investment Limits

Residents in India, including individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions, are eligible to invest in SGBs. The minimum investment is 1 gram, with bonds issued in denominations of one gram or multiples thereof. Individual and HUF investors have a maximum subscription limit of 4 kg per fiscal year, while trusts and government-notified entities can subscribe up to 20 kg annually.

How to Buy Sovereign Gold Bonds Online

Investors can purchase SGBs online through two avenues: the secondary market or primary issuance. Online purchases often come with a Rs. 50 discounts compared to the nominal price. For secondary market purchases, investors can visit the BSE or NSE websites, while scheduled commercial banks facilitate primary issuance.

The online process:

• Log in to your online banking account.
• Select the ‘eServices’ option, then the ‘Sovereign Gold Bond’ option.
• Read and accept the terms and conditions before clicking ‘Proceed’.
• Fill out the registration form with the necessary information and click the ‘Submit’ button.
• Enter the number you want to subscribe to and the nominee’s information in the purchase form.
• Select ‘Submit’ once all of the required information has been entered.

Should Investors Consider SGBs?

SGBs are an attractive investment option for those willing to hold the investment until maturity. Backed by sovereign guarantees, they eliminate credit risk and provide a fixed-interest income, addressing the income gap typically associated with gold investments. The tax benefits, including exemption on capital appreciation at maturity, further enhance their appeal.

Know: Sovereign gold bonds 2023-24 series III

Outlook

The financial outlook suggests that SGBs offer a compelling investment opportunity, particularly given the historical track record of steady and high returns. While gold prices can experience volatility, factors such as geopolitical tensions, central bank buying, and concerns about global economic conditions can support gold prices.

Conclusion

Sovereign Gold Bonds 2023-24 Series IV present a well-structured investment option for those seeking exposure to gold. Investors should carefully consider their investment horizon, risk tolerance, and portfolio allocation before deciding to subscribe. As always, it is advisable to consult with financial advisors to make informed investment decisions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.