First Tranche for the SGB Scheme 2022-23 Open Today; All You Need to Know

Sovereign Gold Bonds

There is still something positive for investors amid the chaos created in the markets around the globe. Gold seems here to be the golden investment instrument that can help us to hedge during inflationary times. The Reserve Bank of India has opened the sovereign gold bond or SGB scheme today, i.e; June 20, 2022. 

This is the first tranche of the SGB scheme for 2022-23 that has opened today. The government will accept applications until Friday, June 24 and the units will be issued on June 28. Here in this article, we will discuss what SGB actually is and all the important things you need to know about SGB 2022-23 first tranche.

What is SGB?

Sovereign Gold Bond or SGB is a gold investment scheme launched by the government of India in November 2015 to allow investors to put their money in gold and earn returns from the same. The units of SGB represent multiples of one gram of gold. It allows you to invest in gold without actually holding physical gold. Investing in SGB will allow you to earn a fixed interest rate annually along with the capital appreciation that will happen to your gold investment.

How Much Can I Earn Through SGB? 

The government has fixed the SGB interest rate at 2.5% annually on the nominal value of gold. The interest is credit to your account twice a year. Apart from the interest rate, your gold investment will remain safe and will continue to incur capital gains if the price of gold increases. 

Is SGB Safe to Invest in?

SGB is not a completely risk-free investment instrument but it is still considered extremely safer than most other options. Moreover, it allows you to capitalize on gold returns in the long term. You will get a fixed interest rate as well as enjoy capital appreciation of your investment. Backed by the government itself, SGB is completely transparent and safe to invest in.

Is there any Lock-in Period in SGB?

SGB investment comes with a lock-in period of 8 years. However, you can make an early exit at the completion of 5 years on the interest payout date. 

What is the SGB 2022-23 price?

The government has fixed the per unit price of SGB at Rs 5,091. There is an attractive discount of Rs 50 per gram for those who invest in SGB through online channels, this makes the effective price to be Rs 5,041 per gram for online investors.

How is the SGB Price decided in the 2022-23 first tranche?

The per unit price of SGB has been decided by taking the average of gold prices on June 15, 16 and 17 this year.

Who can invest in SGB?

SGB is open for investment from individuals, trusts, HUFs, charitable organizations, and universities. One can also invest on behalf of a minor or jointly.

When will the second tranche of SGB 2022-23 open?

The second tranche of SGB will open on August 22, 2022, and will continue till August 26, 2022. 

What are the minimum and maximum investments allowed in SGB 2022-23?

You have to buy at least one unit of SGB, which as per the first tranche of 2022-23 translates into an investment of Rs 5,091 (Rs 5,041 with discount). The maximum amount is as follows:

  • Individuals: Up to 4 Kg
  • HUFs: Up to 4 Kg
  • Trusts and other similar organizations: Up to 20 Kg

The data is as per the fiscal year 2022-23. The government specifies the same from time to time.

How can I invest in SGB?

You can invest in SGBs through banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), post offices (as notified), and exchanges like NSE and BSE. Investment can be made directly or through agents of these institutions.

Can I take out a loan on SGB?

Yes, you can take a loan on your SGB investments. It is similar to a gold loan.

Is SGB tax-free investment?

The interest earned from SGB investment is taxable as per the provisions given under the Indian Tax Act. However, the capital gains incurred over the years is tax-free and also come with indexation benefits, if held until maturity.