HomeGoldSovereign Gold Bonds -2021-22 - How and When to Purchase?

Sovereign Gold Bonds -2021-22 – How and When to Purchase?

Sovereign Gold Bonds scheme 2021-22 is released. Sovereign Gold Bond is backed by the government of India. It is one of the best option to invest in the Gold.

The Gold price history shows that gold is becoming valuable asset every year. In the year 2020 the price of 10 gm Gold has touched Rs. 57300. If current trends continue Gold price may reach 1 Lakh per 10 gm in next 10 years. So, it really makes sense to invest in the gold. There are multiple options to invest in the gold such as Gold ETF, physical gold and Sovereign Gold Bond. Key features, benefits and method to invest in Sovereign Gold Bonds (SGB) are given below.

Sovereign Gold Bonds

Sovereign Gold Bonds scheme -2021-22 – Key Features

Tenor – SBG tenor for the bond will be 8 years. The lock-in period would be 5 years. Investor can exit from gold bond after 5th, 6th and 7th Year of interest payment. Investor needs to exercise option in order to exit from the gold bond.

Interest Payment – Investor will get additional interest amount every year in the gold bond. The interest rate is fixed as 2.5% by the government. The interest amount is payable after every six months.

Returns – On gold bond you will get returns which is equal to gold price. The calculation would be based on average of the closing price of gold of 999 purity in the previous three working days.

Denomination – Gold bonds denomination starts from 1 unit. 1 Unit is equal to 1 gm of gold. Minimum investment in gold bond is equal to 1 gm. Maximum investment denomination is 4 Kg for individual and HUF and 20 Kg for trusts and similar entities.

Taxability – As gold bonds returns are divided in two parts interest amount and redemption amount. This means taxability on gold bond is also divided into two parts.

Interest earned during financial year is added to annual income of the investor and taxed as per applicable tax slab. If investor is holding the bond until maturity 8 years, then capital gain tax is not applicable on the maturity amount.   

Sovereign Gold Bond Benefits

Investment in gold bonds gives following benefits.

  • Sovereign Gold bond is backed by the government and it is absolutely safe to invest in the SGB. Except market risk there are no risk associated with Gold bond.
  • You can earn additional fixed interest 2.5% on the issue price. This rate is decided at the time of issuance.
  • Gold bond provide indexation benefit. This means long term capital gain arising from bond qualify for the indexation benefits.
  • Investor can do trading of gold bond at stock exchange within specific date. Trading is allowed only after lock-in period is over.
  • Gold bond can be used as collateral/security against loan. Loan to value ratio is decided by the bank at the time of lending money.

Sovereign Gold Bond 2021-22 Calendar 

Sr No Tranche Date of Subscription Date of Issuance
1 2021-22 – Series 1 May 17 – May 21, 2021 May 25, 2021
2 2021-22 – Series 2 May 25 – May 28, 2021 June 01, 2021
3 2021-22 – Series 3 May 31 –  June 04, 2021 June 08, 2021
4 2021-22 – Series 4 July 12 – July 16, 2021 July 20, 2021
5 2021-22 – Series 5 Aug 09 – Aug 13, 2021 Aug 17, 2021
6 2021-22 – Series 6 Aug 30 – Sept 03, 2021 Sept 07, 2021

 

How to purchase Sovereign Gold Bonds?

Gold bonds are sold by scheduled banks except small finance banks and payment banks. These bonds are also sold at stock exchanges BSE, NSE and designated post offices. You need to fill up form and submit the amount for buying the bond.

If you are facing issue in buying gold bond offline, you can purchase it online. Here is step by step process to purchase SGB at ICICI bank.

Step 1- Login to your net banking account of ICICI Bank

Step 2- Go to Investments & Insurance

Step 3 – Click on Invest Online

Step 4 – Select Sovereign Gold Bond and specify the quantity you wish to buy.

You can also make use of iMobile app for buying Gold bond. You will get discount of Rs.50 per gram for buying SGB online.

Shitanshu Kapadia
Shitanshu Kapadiahttp://moneyexcel.com/
Hi, I am Shitanshu Kapadia founder of moneyexcel.com. I have written 1800+ articles on this blog. I am PGDBA(marketing), engaged in blogging for 10 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. The purpose of this blog is to spread financial awareness and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.
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