Festive meals are one of the highlights of the holiday season, especially with Christmas around the corner. Yet, alongside the joy of good food and long tables filled with favourites, many people experience a predictable rise in acidity, bloating and indigestion
Can You Still Buy Sovereign Gold Bonds In India? How To Buy SGBs, Interest, Benefits & Other Details
Can You Still Buy Sovereign Gold Bonds In India? How To Buy SGBs, Interest, Benefits & Other Details
SGB: Sovereign Gold Bonds (SGB), the government-backed gold scheme, have delivered eye-popping returns to investors since inception. SGBs offered a mix of long-term, tax-free capital appreciation along with a fixed 2.5 per cent annual interest.
Due to the rising exchequer cost, the government discontinued the scheme in February 2024. With the scheme now discontinued, many investors are turning to the secondary market to buy SGBs.
Investors can buy Sovereign Gold Bonds from the secondary market through any trading app such as Zerodha, Groww or Upstox, just like purchasing a normal share. They have to go to search bar and type “SGB" in the app, check the series name and maturity year, and look at the market price and trading volume, as some series have very low liquidity.
It is safer to place a limit order because prices can vary widely due to the bid–ask spread. Once the units are credited to your demat account, you will receive the 2.5% annual interest directly in your bank account. If you hold the bond till maturity, the capital gains remain completely tax-free, even if you bought it from the secondary market.
Buying SGBs from the secondary market makes sense only if they are available at a small premium, said Amar Ranu, Head – Investment Products & Insights at Anand Rathi Share & Stock Brokers. “If the premium is large, it materially reduces the upside versus buying a gold ETF," Ranu added.
When asked what investors should choose between SGBs and ETFs, Ranu recommended gold ETFs, saying they are easier to trade and come with lower implicit costs. “For tax-efficient long-term holding plus the fixed coupon, SGBs can be better only if the premium is small relative to expected gains and the investor really plans to hold till maturity," he said.
Ravi Singh, Chief Research Officer at Master Capital Services, explained that both SGBs (from the secondary market) and gold ETFs can work depending on the investor's goal. “SGBs suit long-term investors because, apart from gold price movement, they also offer a fixed 2.5% annual interest. The downside is liquidity, which is not always smooth, so the exit may not be immediate. Gold ETFs, however, are easy to trade and offer more flexibility," Singh added.
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The capital gains exemption on SGBs applies only when the bond is held till maturity and redeemed with the RBI, Singh said. If sold on the exchange, normal capital gains tax applies, similar to gold ETFs.
Ranu added that if an investor sells SGBs on the exchange, gains become taxable. “SGBs or other gold investments qualify as long-term if held for more than 24 months; long-term capital gains on such transfers are taxed at 12.5% (without indexation) for transfers on or after 23 July 2024. Short-term gains (24 months or less) are taxed at the investor's slab rate. Only redemption at maturity — or redemption directly with the RBI — is exempt from capital gains tax," he explained.
Source: News18
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Festive meals are one of the highlights of the holiday season, especially with Christmas around the corner. Yet, alongside the joy of good food and long tables filled with favourites, many people experience a predictable rise in acidity, bloating and indigestion
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