The Sovereign Gold Bond Scheme 2022-23 – Series II is now open for subscription for the period from August 22 to August 26, 2022. The issue price is Rs 5,197 per gram of gold as against physical gold price of over Rs 5,250 per gram in Indian markets on August 22, 2022. The online investors enjoy a discount of Rs 50 per gram of gold, lowering the issue price to Rs 5,147 per gram.
If you are looking to buy gold, the Sovereign Gold Bond (SGB) is a better choice over physical gold, especially if your target is to accumulate gold for the marriage of your child some years later.
This is because from the angles of making charges, quality, safety, cost of storage, taxes etc, SGB is far more beneficial than the physical gold.
Here are 5 reasons, why investing in SGB is a better choice than investing in physical gold:
1. Gold that can’t be Stolen
Gold is not only expensive, but to keep physical gold safely, you need to spend money on hiring a bank locker, buying insurance etc. However, in the case of SGB, the government takes the responsibility of keeping the gold reserve safe.
2. Gold that Earns Interest
Not only will you save the money to ensure safety of the gold, but you will earn an assured interest of 2.5 per cent per annum – payable semi annually – on the nominal value of investment over the 8-year investment period.
3. Sovereign Guarantee
The SGB has the Sovereign Guarantee of Government of India regarding quality of gold, safety, interest payment and return of investment in the prevailing gold prices at the time of maturity. So, there are no risks involved in investing in SGB.
4. Gold-linked Returns
On maturity, you will get the return on the prevailing gold prices in the year of maturity, based on a simple average of the closing price of gold of 999 purity of the previous three working days prior to the date of maturity published by the India Bullion and Jewellers Association Ltd (IBJA).
5. No Capital Gain Tax on Maturity
For individual investors, the capital gains tax arising on redemption of SGB on maturity will be exempted. In case an investor transfers the SGB before maturity, he/she will get indexation benefits on the long-term capital gains while calculating the tax.