Government Announces New SGB Tranche for 2023-24: All You Need to Know
Introduction
Traditionally, gold has been a popular investment among Indians since ages. However, investment in physical gold is fraught with danger of theft and liquidity problems. To address these problems, the Government of India came up with the Sovereign Gold Bond scheme (SGB) in November 2015. These bonds are issued by the RBI on behalf of the Government.
Recently, the Government announced that the RBI will issue two tranches of Sovereign Gold Bonds. The 2023-24-Series I will open for subscription during the June 19-June 23 period and the 2022-23-Series II will open for subscription during the September 11-September 15 period, as announced by the RBI on June 15, 2023.
SGB New Tranches Details:
| Particulars | Details |
| Name of Tranche | 2023-24 Series I |
| Date of Subscription | June 19 - June 23, 2023 |
| Date of Settlement | June 27, 2023 |
| Issue Price | ₹5,926 per gram (₹5,876 per gram for digital mode payments) |
| Tenure | 8 years |
SGB First Tranche Price Movement:
| Date | Issue Price |
| April, 2018 | Rs 3,114 |
| May, 2019 | Rs 3,196 |
| April, 2020 | Rs 4,639 |
| May, 2021 | Rs 4,777 |
| June, 2022 | Rs 5,091 |
| June, 2023 | Rs 5,926 |
SGB vs Gold ETFs vs Physical Gold:
| Particulars | Sovereign Gold Bond | Gold ETF | Physical Gold |
| Safety | High due to electronic holding | High due to electronic holding | Threat of theft/wear and tear |
| Returns | Linked to market performance of gold + 2.5% per year. | Linked to market performance of gold. | Less than actual gold value due to making charges |
| Purity | High due to electronic holding | High due to electronic holding | High chances of adulteration |
| How is it traded? | Can be traded and redeemed from the fifth year. | Traded on stock exchanges | Offline transactions. Heavy reliance on gold merchants. |
| Tax on Gains | LTCG after three years (No tax if redeemed after maturity) | LTCG after three years | LTCG after three years |
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.
How is the SGB 2023-24 first tranche issue price decided?
The RBI informed that the price of the SGB will be fixed on the basis of a simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period.
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 first tranche of SGB 2023-24 open?
The fourth tranche of SGB will open on June 19, 2023, and will continue till June 23, 2023.
What are the minimum and maximum investments allowed in SGB 2023-24?
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 5,926 (Rs 5,876 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 are tax-free and also come with indexation benefits, if held until maturity.
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.
Is SGB a good investment in 2023?
The bond is issued by the RBI on behalf of the RBI, making it a transparent and trustworthy investment option.
When can I buy SGB in 2023?
SGBs are available for premature redemption through RBI's buyback window from the 5th year onwards of the respective bonds.
How many tranches does a sovereign gold bond have?
SGBs are denominated in grams of gold. The price of each gram is linked to the value of gold with 999 purity. In one financial year, the RBI issues around SGBs in 12 intervals or tranches.