All About Sovereign Gold Bond Scheme (SGB) - 2024.

9. Payment option: Payment for the bonds can be made through cash payment (up to a maximum of Rs. 20,000/-), demand draft, cheque, or electronic banking.

10. Issuance form: The Gold Bonds will be issued as Government of India Stocks under the GS Act, 2006. A Holding Certificate will be issued to investors for the Gold Bonds, which can also be converted into Demat form.

11. Sales channel: Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified), and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.

12. Interest rate: The investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.

13. Collateral: Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio will be aligned with the ordinary gold loan mandated by the Reserve Bank, ensuring consistency.

14. Tax treatment: The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961). Individuals will be exempted from capital gains tax when redeeming SGB, and long-term capital gains resulting from the transfer of bonds will be eligible for indexation benefits.

15. Tradability: Bonds will be tradable on stock exchanges.

By investing in Sovereign Gold Bonds, individuals can participate in the gold market through a financial instrument that offers advantages such as tax efficiency, diversification, and a hedge against equities.

It is crucial for investors to thoroughly assess their investment goals, risk appetite, and long-term commitment before considering SGBs.

How do I withdraw my sovereign gold bond after it matures?

SGB investors will receive a one-month advance notice of bond maturity. On the date of maturity, the proceeds will be credited to the investor's bank account. In this situation, the same bank account that was used to make the initial investment will be used, as recorded with the institution.

Approach your bank/SHCIL/Post Office: At least 30 days before the coupon payment date, visit the branch of the bank, Stock Holding Corporation of India Limited (SHCIL), or the post office where you bought the SGBs.

Important points to remember in SGBs

Here are some of the major things that you should be aware of if you are planning to invest in Sovereign gold bond:

• You can only redeem SGBs in whole units, not partially.

• Premature redemption comes with a penalty of 0.5% of the face value for redemption before the 5th anniversary and 0.25% thereafter.

• If your bank account details have changed, inform the bank/SHCIL/Post Office beforehand.

• You can also trade SGBs on the stock exchange after the initial lock-in period of 5 years. This involves opening a demat account and using a broker.

Sovereign Gold Bonds are perfect for investors looking for a safe, long-term investment with some exposure to gold prices. However, they may not be the greatest option for people looking for big returns or immediate access to actual gold.

Before investing in Sovereign Gold Bond(SGB), make sure that you consider your investment objectives, risk tolerance, and current market conditions.