SGBs are securities issued by Reserve bank of India on behalf of Government of India. They are denominated in grams of gold & are good substitutes to physical gold.

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Persons resident in India are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.

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.

The Bonds carry coupon rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of Bond holder and the last interest will be payable on maturity along with the principal. Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961)

As a low-risk investment, it is perfect for investors with a low-risk appetite. Compared to physical gold, the cost to purchase or sell SGBs is quite low. The expense of buying or selling the SGB is also nominal in comparison to the physical gold.

Gold bonds have a maturity period of eight years. So, in case you buy gold bonds and hold them till maturity, the capital gains will be taxfree.

As a part of diversification, we suggest our clients to invest portion of their savings in these Bonds and provide them with investing services.

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