Sovereign Gold Bond Scheme 2023-24 Series IV Opens for Subscription

February 12, 2024

The Reserve Bank of India (RBI) has announced the opening of the next tranche of Sovereign Gold Bond Scheme 2023-24 – Series IV. The bonds will be open for subscription from February 12 to February 16, 2023. The issue price has been fixed at ₹6,263 per gram.

About the Scheme

Sovereign Gold Bond Scheme is a financial instrument used by the Government of India to mobilize money for the infrastructure and social sector. These taxable bonds are denominated in grams of gold and issued by the Reserve Bank of India on behalf of the Government. The objective is to shift investment in physical gold into financial savings. The bonds offer an annual return of 2.5% along with capital appreciation linked to gold prices. They have a tenure of 8 years with exit options after the 5th year. The bonds can also be used as collateral for loans.

Key Details

The Sovereign Gold Bonds have a tenure of 8 years with an exit option after 5 years. The bonds offer an annual interest rate of 2.50% to investors which is fully taxable. The bonds are being sold through commercial banks, post offices, stock exchanges and the RBI.
Investors applying online and making payment through digital modes will get a discount of ₹50 per gram on the issue price. The issue price for such investors will be ₹6,213 per gram.

Taxation

The interest earned on the bonds every year is fully taxable as per the investor’s tax slab. However, the capital gains made on redemption of the bonds is exempted from tax if held until maturity. This tax exemption is applicable even if bonds are redeemed after 5 years.
If the bonds are sold before maturity, capital gains tax has to be paid. Long term capital gains tax with indexation benefits applies if bonds are held for more than 12 months. Short term capital gains tax is applicable if held for less than 12 months.

Who Should Invest

The Sovereign Gold Bond Scheme can be a good addition to an investor’s portfolio looking for exposure to gold. Here are some key benefits of investing in the scheme:

Provides ownership of paper gold without storage issues of physical gold
Offers guaranteed returns of 2.5% annually
Capital gains tax exempted on redemption if held till maturity
Can be used as collateral for loans
Trading possible on stock exchanges if liquidity is required

Therefore, investors looking to diversify their portfolio with gold exposure can consider investing in this tranche of the Sovereign Gold Bond Scheme 2023-24.

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