SOVEREIGN GOLD BOND SCHEME 2023-24 Series IV

❖ A few of the disadvantages of investing in SGB as an asset include:
1. Interest is taxable.
2. Liquidity is only possible if the security is in Demat form.
3. Capital Gains would be charged at 20% if sold before maturity (though Indexation benefit is available)
4. There is no way to add additional Bonds if gold rates fall so the entry is only for a limited time.

Documents Required to invest in Sovereign Gold Bond :Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as :

a] PAN CARD / TAN 
b) Aadhaar Card
c) Passport
d) Driving License
e) Identify Card issued by any institution
f) Copy of the electricity bill or telephone bill showing residential address
g) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address
h) Voters Identity Card
i) Ration Card

Trust etc
Documents in support (copies attested by Notary)
a) Certificate of registration, if registered
b) Power of Attorney granted to transact business on its behalf
c) Any officially valid document to identify the Trustees, Settlors, Beneficiaries and those holding Power of Attorney, Founders/Managers/ Directors and their
addresses
d) Resolution of the managing body of the Foundation/Association
e) Telephone bill
f) Copy of PAN/PAN Allotment letter (otherwise exemption certificate issued by IT Authorities)

Demat Mode: Scan copy of PAN card & Client Master list.

Payment Details: Cheque should be in favor of NSE Clearing – New Mutual Fund Platform.

RTGS / NEFT Beneficiary Bank Details : Account Type Current Account
Beneficiary Name	Beneficiary Bank Name, Branch	Account No	IFSC (for RTGS/NEFT Transfers)
NSE Clearing – New Mutual Fund Platform	HDFC Bank Ltd., Fort, Mumbai.	50200009635552	HDFC0000060

Comparison among Sovereign Gold Bonds, Physical Gold and Gold ETF
Particulars	Sovereign Gold Bonds	Physical Gold	Gold ETF
Returns/ Earnings	More than actual return on physical gold	Lower than real return on gold due to making charges	Less than actual return on physical gold, since annual expense deducted
Sovereign guarantee	Yes	NA	No
Interest on the investment	Yes	No	No (No dividend option provided on Gold ETF)
Capital Appreciation /depreciation	Yes	Yes	Yes
Annual fund management fees	No	No	Yes
Brokers charge on buying	No	No	Yes
Exit / redemption option	Only from 5th year	Any time exit	Any time exit
Tradability	Yes	Yes	Yes
Liquidity	Limited	Highly liquid	Highly liquid
Storage / Insurance charges	No	Yes	No
Quality check required	No	Yes	No

The date of issuance shall be as per the details given in the calendar FY 22-23 below:

S. No.	Tranche	Date of Subscription	Date of Issuance
1	SGB 2021-22 Series I	May 17 – 21, 2021	May 25, 2021
2	SGB 2021-22 Series II	May 24 – 28, 2021	June 01, 2021
3	SGB 2021-22 Series III	May 31 – June 04, 2021	June 08, 2021
4	SGB 2021-22 Series IV	July 12 – 16, 2021	July 20, 2021
5	SGB 2021-22 Series V	August 09 – 13, 2021	August 17, 2021
6	SGB 2021-22 Series VI	August 30 – September 03, 2021	September 07, 2021
7	SGB 2021-22 Series VII	October 25 – 29, 2021	November 02, 2021
8	SGB 2021-22 Series VIII	November 29 – December 03, 2021	December 07, 2021
9	SGB 2021-22 Series IX	January 10 – 14, 2022	January 18, 2022
10	SGB 2021-22 Series X	February 28 – March 04, 2022	March 08, 2022
11	SGB 2022-23 Series I	June 20 – June 24, 2022	June 28, 2022
12	SGB 2022-23 Series II	August 22 – August 26, 2022	August 30, 2022
13	SGB 2022-23 Series III	December 19 – December 23 2022	December 27, 2022
14	SGB 2022-23 Series IV	March 6 – March 10 2023	March 14, 2023
15	SGB 2023-24 Series I	June 19 – June 23 2023	June 27, 2023
16	SGB 2023-24 Series II	September 11 – September 15 2023	September 19, 2023
17	SGB 2023-24 Series IV	February 12 – February 16 2024	February 21, 2024

So, how should I go about SGB? Why Is Patience Required for Successful Investing?

So before to investing in SGB, Analise why you are investing:-
a) If you’re looking for a way to make money, don’t invest in gold because it tends to give you returns that are in line with inflation. Gold by itself does not make you Rich or Wealthy, even if you are a gold lover and accept the benefits that SGB does offer….
b) If it’s for the sake of capital safety, it’s fine.
c) If it’s a substitute for physical gold, then yes…please go ahead.
d) If the goal is to diversify your investments, the answer is yes. Please proceed. Maintain your asset allocation. Invest only if your Asset Allocation suggests that you need more gold exposure.
e) Physical Gold’s biggest flaw is that it does not produce anything. There will be no interest, dividends, rent, or anything else.

Invest ONLY if you are certain you will hold until maturity. Given the interest income and LTCG tax, SGBs are the best choice if you have an 8 year horizon. Even if we assume a 5% increase in gold prices over the next 8 years, the returns will be much higher due to the additional interest of 2.5 percent provided by the government.
For example, if you invest Rs.10,00,000/- in this bond and it will appreciates to Rs. 14,77,477.44/- at the rate of 5%, also you will receive Rs.12,500 every six months in your bank account, which is 2.5% p.a. i. So the total for the next eight years will be Rs. 2,00,000/-. So you will end up with Rs.16,77,477.44/-, representing a 7.16% CAGR.

Keep in mind that you should not have more than 5-10% gold exposure. Do not ignore the mantra “Do not put all your eggs in one basket.” I do have a small amount of exposure to gold mutual funds.

Gold only grows because people believe that someone else will buy it for a higher price in the future. But the Gold price rise because of FEAR factor. What if a World War breaks out? What if a Crisis Occurs? What if a Pandemic Strikes? Whenever it happens, gold prices skyrocket. However, Didn’t the stock markets rise during the Covid 1st Wave as well? Indeed, stock markets have more than doubled in value, which provides greater returns than gold.

At last, I respectfully request that you refrain from purchasing gold as an investment. Yes, you may purchase gold as an ornament to wear, but do not begin a gold investment, even if you have a female child. Yes, gold is important in a marriage, but that does not mean you should only invest in gold. Remember, whether it’s gold, equities, or real estate, always be practical and never be emotional, patience is the Key to Successful Investing.

Frequently Asked Questions related to Sovereign Gold Bonds (SGB) Investments:

1. What exactly is a Sovereign Gold Bond (SGB)? What is the name of the issuer?

Answer: Sovereign Gold Bonds are government securities denominated in grams of gold that are offered and regulated by the RBI. They serve as a replacement for physical gold. Investors must pay the issue price in cash, and the bonds must be redeemed in cash as they reach maturity. The Reserve Bank of India issues the bond on behalf of the Government of India.

2. Why should I invest in SOVEREIGN GOLD BOND SCHEME instead of physical gold? What are the advantages?

Answer: The amount of gold paid for by the investor is protected when he gets the current market price at the point of redemption/premature redemption. The SOVEREIGN GOLD BOND SCHEME is a superior option to physically possessing gold. Storage risks and costs are reduced. Investors are guaranteed the fair value of gold at maturity as well as annual interest. In the case of gold in jewelry form, SOVEREIGN GOLD BOND is free of defects such as making charges and purity. The bonds are kept in the RBI’s books or in Demat form, removing the possibility of scrip loss, etc.

3. Is there any risk of purchasing a Sovereign Gold Bond?

Answer: SGBs are insured by the RBI, but there is a chance of capital loss if the market price of gold falls. However, the investor would not lose the gold units that he has paid for.

4. Who is eligible to invest in the Sovereign Gold Bond?

Answer: Persons residing in India as specified by the Foreign Exchange Management Act of 1999 can invest in SGB. Individuals, HUFs, trusts, universities, and charitable institutions are also qualified investors. Individual investors who change their residential status from resident to non-resident can continue to hold SGB until they are redeemed or mature.

5. Whether joint holding will be allowed?

Answer: Yes, joint holding is allowed.

6. Is it possible for a minor to invest in an SOVEREIGN GOLD BOND?

Answer: Yes. The minor’s guardian must file the application on his or her behalf.

7. Where can investors get the application form?

• Answer: The application form will be provided by Sanriya Investments office. It can also be downloaded from the Sanriya Investments website www.sanriya.in

8. What are the Know-Your-Customer (KYC) norms?

Answer: Any application must be followed by the investor’s ‘PAN Number’ provided by the Income Tax Department (s).

9. Will an investor submit to the Sovereign Gold Bond with more than one investor ID?

Answer: No, it does not. An investor can only have one specific investor Id that is connected to each of the specified identity documents. The one-of-a-kind investor ID must be used for all future contributions in the scheme. The quoting of PAN in the application form is needed for holding securities in dematerialized form.

10. What is the minimum and maximum limit for investment in SOVEREIGN GOLD BOND?

Answer: The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

11. Is it possible for each member of my family to purchase 4Kg SGB in their own name?

Answer: Yes, each family member may purchase bonds in his or her own name if they meet the eligibility requirements.

12. Can an investor/trust purchase 4 Kg/20 Kg of SOVEREIGN GOLD BOND per year?

Answer: Yes. Since the limit is set on a fiscal year (April-March) basis, an investor/trust can purchase 4 Kg/20 Kg of gold per year.

13. Is the maximum limit of 4 Kg applicable in case of joint holding?

Answer: The maximum limit will be applicable to the first applicant in case of a joint holding for that specific application.

14. What is the interest rate, and how can that be paid? Do they pay monthly, quarterly, semi-annually, or annually?

Answer: The Bonds pay interest at a fixed rate of 2.50 percent per year on the initial investment. Interest will be credited semi-annually to the investor’s bank account, and the final interest will be payable along with the principal at maturity.

15. Is Sanriya Investments the authorized agency for selling the Sovereign Gold Bond?

Answer: Bonds are sold through Sanriya Investments.

16. Is it guaranteed that I will be allotted SGB, if I apply?

Answer: If the customer meets the qualifying requirements, provides a proper identification document, and remits the application money on time, he/she will receive the allotment.

17. When will investors get their Holding Certificates?

Answer: Investors will receive a Certificate of Holding on the day the SGB is issued. If an email address is given in the application form, a certificate of holding may be obtained directly from the RBI via email.

18. Can I apply online?

Answer: Yes. A customer can apply online through the website of Sanriya Investments. The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

19. At what price the bonds are sold?

Answer: The nominal value of Gold Bonds shall be in Indian Rupees fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.

20. Will the RBI publish the gold rate on a daily basis?

Answer: The related tranche’s gold price will be announced on the RBI website two days before the issue opens.

21. What will I get on redemption?

Answer: On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.

22. How will I be able to receive the redemption amount?

Answer: Both the interest and redemption proceeds will be transferred to the bank account provided by the customer when the bond was purchased.

23. What steps are taken in the redemption process?

Answer: • One month before maturity, the investor will be notified of the bond’s upcoming maturity.

• On the maturity date, the maturity proceeds would be transferred to the bank account specified in the record.
• Whenever any information, such as account numbers or email addresses, alter, the creditor must notify the bank or exchange.

24. May I cash in the bond anything I want? Is it possible to redeem SGB early?

Answer: Through the bond’s 8-year period, early encashment/redemption is permitted after the fifth year from the date of issue on coupon payment dates. If the bond is kept in Demat form, it would be tradable on exchanges. It is also transferable to any other eligible investor. Liquidity is available from secondary markets as these bonds are mandated to be listed on BSE and NSE. However, the liquidity of the past issues are quite low and restricted only to few tranches. Most of the past series of SGBs are trading at a discount to the gold prices due to lack of liquidity and depth in the market. 

25. What do I do if I want to sell my SGB investment?

Answer: In the event of a premature redemption, investors should contact the relevant bank or post office thirty days before the coupon payment date. Premature redemption requests will only be considered if the investor visits the relevant bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

26. May I give the SGB as a gift to a family or relative on a special occasion?

Answer: The bond may be given/transferred to a relative/friend/anyone who meets the eligibility requirements. The Bonds shall be transferable prior to maturity in compliance with the rules of the Government Securities Act 2006 and the Government Securities Regulations 2007 by execution of an instrument of transfer available with the issuer.

27. May I use these SGB securities as debt collateral?

Answer: Yes, these securities can be used as collateral for bank, financial institution, and non-banking financial company loans (NBFC). The loan-to-value ratio would be the same as that prescribed by the RBI for ordinary gold loans from time to time. Loans made against Sovereign Gold Bonds will be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.

28. What are the tax implications of I interest and ii) capital gain? Is it tax free?

Answer: The interest on the bonds would be taxable in accordance with the terms of the Income-tax Act of 1961. (43 of 1961). The capital gains tax on SGB redemption to an owner has been waived. Long-term capital gains arising from the transfer of a bond would be eligible for indexation benefits. Capital gains tax treatment (except in case of redemption) will be the same as that for physical gold (20% tax after indexation benefit if held for three years). TDS is not applicable on the bond interest/redemption proceeds. 

29. Is the bond subject to tax deducted at source (TDS)?

Answer: TDS would not apply to the bond. However, it is the bond holder’s responsibility to comply with tax laws.

30. Who will provide other customer services to the investors after issuance of the SGB?

Answer: The issuing banks offices/Post Offices/Designated stock exchanges/agents through which these securities have been purchased will provide other customer services such as change of address, early redemption, nomination, grievance redressal, transfer applications etc.

31. What are the payment options for investing in the Sovereign Gold Bonds?

Answer: Payment can be made through cash (upto ₹ 20000)/cheque/demand draft/electronic fund transfer i.e. Net banking, RTGS / NEFT etc.

32. Is there a nominating facility for SGB investments?

Answer: Yes, according to the rules of the Government Securities Act of 2006 and the Government Securities Regulations of 2007, a nomination facility is open. Along with the application form, a nomination form is available. An individual Non – resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:

A] the Non-Resident investor shall need to hold the security till early redemption or till maturity; and

B] the interest and maturity proceeds of the investment shall not be repatriable.

33. Can I get the bonds in Demat form?

Answer: Yes. The bonds can be held in Demat account. A specific request for the same must be made in the application form itself.

Till the process of dematerialization is completed, the bonds will be held in RBI’s books. The facility for conversion to Demat will also be available subsequent to allotment of the bond.

34. Is it possible for me to trade these SGB?

Answer: The bonds will be available for trading on a date to be announced by the RBI. (It should be noted that only bonds kept in de-mat form with depositories are eligible for trading on stock exchanges.) The bonds can also be sold and transferred in accordance with the rules of the Government Securities Act of 2006. Bonds may also be transferred in parts.

35. What is the procedure to be followed in the event that SGB, an investor, dies?

Answer: The nominee/nominees to the bond may file a claim with the respective Receiving Office. The nominee/nominees’ claim will be accepted in accordance with the provisions of the Government Securities Act of 2006, as well as Chapter III of the Government Securities Regulations of 2007.  In the absence of nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) may be submitted to the Receiving Offices/Depository. It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.

36. Will I get a portion of these bonds repayment when I exercise my put option?

Answer: Part holdings may be redeemed in fractions of one gram.

37. How do I approach the RBI with questions about the Sovereign Gold Bond?

Answer: The Reserve Bank of India has created a specific e-mail address, sgb@rbi.org.in, to receive public inquiries about Sovereign Gold Bonds. Investors should submit their questions to this email address.

38. why do you invest in Sovereign Gold Bond? What are the tax advantages of investing in it?

Answer : It is for investment purpose, no tax benefit given.

39. How many bond certificates will I get if I invest in 200 grams of Sovereign Gold Bond?

Answer : Since each bond unit is of 1 Gram, the Govt of India will issue a single certificate mentioning 200 units.

40. Do I need a Demat account to invest, or can I invest in physical form in SGB?

Answer : These Sovereign Gold Bond can be purchased in either physical or Demat form. A Demat account is not mandated; there is no need to open a new one. If you do not have a Demat account, you will get a copy on email (bond certificate similar to your Fixed Deposit Receipt.)

41. Is it necessary for me to open a new bank account with the application’s accepting bank for SGB?

Answer : There is no need to open a new bank account; payment from your existing bank account from any bank would sufficient for investments. (It is not required to open bank account with application submission center)

42. Do I have to pay any charges/Fees* or brokerage / commission to the broker for Sovereign Gold Bond?

Answer: No, brokerage is paid by Sovereign Gold Bond to broker. So ask for service, not brokerage.

43. Does the broker share / offer a percentage of the commission as a kickback to the investor for investment in Sovereign Gold Bond?

Answer: No, it is illegal.

44. If there is no bank or submission center for Sovereign Gold Bond in my area?

Answer: If your location has not mentioned in the list, in that case you can call our office they will help you.

45. Do Sovereign Gold Bond needs a nominee signature?

Answer: It is entirely optional.

46. Will it suffice if I make the RTGS or NEFT transfer for the Sovereign Gold Bond account first and then submit the application form?

Answer: Yes, you must submit the required paperwork, as well as your UTRN No. / Payment reference number before closing the issue.

47. If I want Sovereign Gold Bond in Demat form, will I get a bond certificate?

Answer: If you have applied for allotment in Demat mode, you will not get a physical certificate; instead, your bonds will be reflected in your Demat account as frozen holdings.

48. How long does it take to receive a physical bond certificate in the case of an SGB?

Answer: It usually takes 2 weeks from the date of your payments / cheque clearance, but it can be delayed by 7 days at times.

49. What are the benefits of buying Sovereign Gold Bonds in comparison to physical gold?

Answer: a] No impurity risk – These bonds are denoted by 999 purity. When one buys physical gold from jeweller, purity of the metal could be a concern
b] No storage risk or cost of storage – Storing physical gold could be a risky affair and involves storage/locker/insurance charges. None of these are applicable
for SGBs
c] No default/counter party risk – Physical gold holders could be exposed to counter party risk, whereas SGBs are backed by the government and issued by
RBI on behalf of the central government
d] No GST or STT – Purchase of physical gold attracts GST. SGBs do not attract GST and there is no STT charged on SGB trades.

50. What are the benefits of buying Sovereign Gold Bonds in comparison to Gold ETF?

Answer: Comparison between Sovereign Gold Bonds and Gold ETF:
a] Two Streams of Returns – SGBs deliver returns in form of interest income (2.50% p.a) on invested capital and in form of capital appreciation at the time of redemption, in case the price at the time of redemption is higher. ETFs generate returns only through capital appreciation if the price at the time of redemption is higher.
b] Transaction charges – Investors have to bear the transaction charges if they want to trade in Gold ETF while there is no such charge involved with SGBs.
c] Expenses – Gold ETF deducts some charges in the name of TER (Total Expenses Ratio) from the total assets. This expense ratio ranges from 0.35% – 1.17% per annum of the total assets.
d] Liquidity – Gold ETFs scores over SGBs when it comes to liquidity. Investors can enter/exit from Gold ETF during any working day of the stock exchanges. Liquidity will not be the constraint (though impact cost may be a hurdle) for the Gold ETF. On the other hand, the encashment/redemption of the Sovereign Gold bond is allowed after fifth year from the date of issue on coupon payment dates. However, these bonds will be tradable on Exchanges, if held in Demat form (but, liquidity may be limited).
e] Taxation – No capital gains tax is payable if the sovereign gold bonds are held till maturity, while ETFs held for more than three years attract capital gains tax (with indexation benefits)

51. Is capital gain tax payable on gains in SGB?

Answer: In case the SGBs are encashed by way of redemption by an individual from the RBI, no capital gains tax is payable. In case the SGBs are sold before the maturity date on the exchanges, then this exemption is not available. In such a case, the Capital Gains will be levied (Long term or Short term based on whether it is held for 3 years or more or less than 3 Years) at the applicable rates i.e. short term (at applicable rates to the investor) and long term (20% after indexation)