Easy to purchase and armed with many benefits and features, Sovereign Gold Bonds [SGBs] make an attractive investment option. Since these gold bonds are issued by the Reserve Bank of India [RBI] on behalf of the Indian government, you can be assured of purity, safety and trust. To know how you can buy gold bonds online, let’s look into what you need to know.
How to Purchase Sovereign Gold Bonds
You can buy SGBs online as well as offline. The RBI issues Sovereign Gold Bonds in tranches throughout the financial year. To make the purchase, you need to submit the SGB application form and supporting documents such as Aadhaar, PAN number, etc. Also, to complete the purchase, you need to ensure you are KYC compliant.
You can buy sovereign gold bonds online through the net banking portal of your bank, stockbrokers, stock exchanges or secondary market. You can also benefit from a discount of ₹50 per gram if you choose to buy them digitally.
What You Need to Remember Before Investing in SGBs
As an individual, you can purchase Sovereign Gold Bonds to a maximum of 4 kg per financial year. Trusts can buy SGBs restricted to 20 kg.
SGBs are issued in different tranches during a financial year by the RBI.
Since RBI introduces new SBG series for sale throughout the year, so even if you have missed out on the last one, you can always await the next issue that’s around the corner.
After making the purchase, you may want to know that the gold bond will not be given to you on the same day of purchase. You will be provided with your gold bond certificate after the date of issue. Once you purchase the bonds, you will be notified by SMS and email, and after it has been issued, you can collect your physical silver and gold bond certificate.
Sovereign Gold Bond Investment Advantages
If you’re looking to purchase gold as an investment, SGBs make a suitable choice. Let’s look at some of the many benefits it offers:
- SGB ensure that the quality of gold you purchase is secured and you are safeguarded against risk.
- You also save on the cost of physical gold and are free from the worry of theft, misuse and pilferage.
- Since SGBs are digital gold forms, you can be assured that these bonds will remain safe in your demat account.
- Investing in gold bonds offers you an attractive interest rate of 2.5% per annum paid half-yearly that gives you the opportunity of earning a passive income on your SGBs that gets directly credited to your account.
- Another significant benefit is the tax exemption on capital gains on the maturity amount of SGBs, thus making it a suitable option for long-term investment. However, interest on gold bonds is taxed according to the Income Tax Act, 1961 (43 of 1961).
- You can also benefit from indexation on long-term capital gains on transferring the gold bonds.
Making an online purchase is even more beneficial. That’s because:
- You receive an RBI-mandated discount on your purchase value
- You can make instantaneous online payments
- It saves you the time and trouble of travelling to an offline venue
Investing in gold bonds through your demat account gives you an additional benefit than other modes of investment. The advantage of purchasing Sovereign Gold Bonds from your ICICI Direct demat account is that you can trade in these bonds, exit them before maturity or sell the bonds at any time in the secondary market.
As an appropriate alternative to buying physical gold, Sovereign Gold Bonds offer you a range of benefits, from price advantage, tax exemption and hassle-free investments. If you’ve missed the tranches issued by the RBI, you can purchase gold bonds on the stock exchange as they can be traded according to RBI’s guidelines.
Sovereign Gold Bonds offer you an ideal investment asset and provide you with portfolio diversification. Besides, they also make a fitting investment from a long-term perspective that can help safeguard your overall portfolio against inflation.
Disclaimer – ICICI Securities Ltd. ( I-Sec). The I-Sec registered office is present at ICICI Securities Ltd. – ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No: 022 – 6807 7100. I-Sec works as a potential distributor to solicit bond-related products. All disputes concerning the distribution activity would not have access to the Exchange investor redressal forum or Arbitration mechanism. The present contents will not be regarded as persuasion or invitation for investment or trading purposes. I-Sec and affiliates do not accept any liabilities for any specific damage or loss of any form that stems from any actions taken in reliance thereon. Any security market investment will be liable to market risks. So, before you start to invest, read the documents properly.