SGBs are issued by the Reserve Bank on behalf of the government and are denominated in grams of gold. Investors earn a fixed interest rate on their investment and also benefit from the price movement of gold. On maturity, the bonds are redeemed at the prevailing gold rate, offering dual returns — interest income and capital gain.
Types of Sovereign Gold Bonds
SGBs come under a single product category but can be held in:
- Individual Holdings : Purchased by resident individuals, including minors through guardians.
- Joint Holdings : Held jointly with a family member or spouse.
- Institutional Holdings : Available for trusts, universities, and charitable institutions.
Features of Sovereign Gold Bonds
- Gold-Linked Returns : Capital appreciation linked to the market price of gold at redemption.
- Fixed Interest Income : Earn 2.50% (subject to change as per latest issuance) annually, payable semi-annually.
- No Storage Worries : Held in demat or paper format — no physical handling or safety concerns.
- Tax Benefits : No capital gains tax on redemption after maturity; interest is taxable as per income tax laws.
- Minimum Investment Requirement : Starts from as low as 1 gram, making it accessible for all investors.
- Long-Term Maturity : Maturity period of 8 years with exit option after the 5th year, offering liquidity and flexibility.
Sovereign Gold Bonds offer a modern, secure, and profitable way to invest in gold. They eliminate storage hassles, provide regular income, and offer capital appreciation — all backed by sovereign guarantee.