Sovereign Gold Bond: There is an earthquake in the market. The Nifty, the index of the National Stock Exchange, recorded a decline of more than 400 points today. Mumbai Stock Market Sensitive Index Sensex also fell by more than 1300 points. This fall in the market has caused huge loss to the investors. Due to this volatility in the market, investors take their approach as a safe investment plan. Gold has always been considered a better asset for investment. In the last few years, gold has emerged as a safe option for investors across the world.
You can invest in gold in many ways. You can buy gold in the form of physical gold i.e. coin, jewelry etc. You can invest in Gold ETFs. You can invest in Gold Mutual Fund or Sovereign Gold Bond.
investment for 8 years
Sovereign Gold Bond is a government securities. Reserve Bank of India issues gold bonds. The maturity of Sovereign Gold Bond is in 8 years. Its lock-in period is 5 years. This means that you can redeem the gold bond after completion of 5 years from the date of purchase.
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Sovereign Gold Bond is in paper form. Therefore, there is no such problem with it where to store it like physical gold. You can easily save in any file.
How much can you invest
In Sovereign Gold Bond, the investor has to invest at least one gram of gold. Any individual and Hindu undivided family can buy gold bonds up to a maximum value of four kilos. Whereas, the maximum purchase limit for trusts and similar entities is 20 kg.
redemption of bonds before maturity
The maturity period of Sovereign Gold Bond is 8 years. After 8 years, the money received from the bond is completely tax free. If you want to redeem the bond before 8 years, then you have to pay tax on it.
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You can redeem the Gold Bond before the completion of the lock-in period of 5 years and before maturity. The proceeds from the sale of gold bonds before maturity come in the form of long term capital gains. On this, you have to pay tax of about 20 percent including the rate of Long Term Capital Gains Tax and other charges.
If gold bonds are listed on the stock exchange, the bonds can be traded on the stock market from a date notified by the RBI. If the gold bond is sold within 3 years from the date of purchase, the return so received will be treated as short term capital gains. This income will be added to your annual income. Then it will be taxed according to the income tax slab.
return on gold bond
Sovereign Gold Bond (SGB) earns a fixed interest rate of 2.5 per cent every year. This interest is taxable under the Income Tax Act. The interest earned from gold bonds in a year gets added to your other sources of income and then the total income is taxed.
Tags: Gold ETF, Gold investment, Gold price, Sovereign gold bond
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