Sovereign Gold Bonds (SGB) FY 2023-24, Feb. 24, Series IV issue

Published on Thursday, February 15, 2024 by Dilip Davda

• For FY 23-24, RBI has added two more series of SGB.
• SGB Series III for FY23-24 came in December, 2023.
• For SGB FY24 Series-IV, RBI has fixed a price of Rs. 6263 per gram.
• The online applicants will be eligible for an upfront discount of Rs. 50 per gram.
• Investment for the long term may be considered.

SGB Series IV (Tranche-67) is scheduled for subscription between February 12 - February 16, 2024.For Series IV it has announced price of Rs. 6263 per gram and Rs. 50 discount for online applicants who will get it at Rs. 6213 per gram. This offer has already opened for subscription on February 12, 2024, and is closing on February 16, 2024. Allotment for this SGB is likely by February 21, 2024.

Subscription for the Bonds may be made in the prescribed application form "Form A" or in any other form as near as thereto, stating clearly the grams (in units) of gold and the full name and address of the applicant. Every application must be accompanied by valid 'PAN details' issued by the Income Tax Department to the investor(s). Designated Scheduled Banks, designated Post Offices, Stock Holding Corporation of India Ltd, Clearing Corporation of India Ltd, and recognized stock exchanges, viz. National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd is the Receiving Offices that are authorized to receive applications for the Bonds either directly or through agents and render all services to the customers. The Receiving Office shall issue an acknowledgment receipt in Form B to the applicant. The SGBs will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions.

The issue price of the SGBs will be less than Rs 50 per gram for the investors who subscribe online and pay through digital mode. An interest rate of 2.5 percent per annum will be paid semi-annually to the investors.

The maximum limit of subscription is 4 Kg for individuals, 4 Kg for HUFs, and 20 Kg for trusts and similar entities per fiscal year.

The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.

The interest on the Gold Bond is taxable under the rules of the Income-tax Act of 1961 (43 of 1961). The capital gains tax on redemption of these bonds to a person is waived. Long-term capital gains deriving from the transfer of a bond will be eligible for indexation benefits.

CONCLUSION:

For investors looking for a long-term investment in bullion, this is the best option for them as they will get half yearly interest at 2.50% p.a. on their investment amount. They will get an option for early redemption after 5 years. In recent years, with the rising gold prices, SGB has emerged as the best investment option for bullion investors. (Apply).

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. Above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

 (SEBI registered Research Analyst-Mumbai).