Sovereign Gold Bonds

Electronic Gold Receipts could unlock idle household gold, offering income opportunities while reducing import dependence without burdening taxpayers

On Akshaya Tritiya, choose gold wisely-jewellery for sentiment, ETFs and SGBs for returns; verify purity, costs, and tax impact before investing

The government is free to change the law for the future. But changing the tax outcome of past investments weakens confidence in the stability of the system

Redemption at ~13,486 a gram delivers nearly fourfold gains in eight years

With the five-year lock-in period ending, investors in SGB 2019-20 Series VII can now opt for premature redemption

Central bank pegs final payout at Rs 12,300 per unit for maturing gold bond issued in November 2017

Central bank sets redemption price at Rs 11,992 per gram, based on the average closing price of gold of 999 purity

Investors holding 2018-19 Series-II sovereign gold bonds can redeem early in October, as the RBI has fixed the price at ₹12,704 per gram

Sovereign Gold Bonds issued in 2018 and 2019 are set for premature redemption on July 1, offering investors over 200% return, plus tax-free gains and 2.5% annual interest.

The series have completed the mandatory five-year lock-in period and investors are allowed early exit

The RBI accepted Rs 1,054 crore worth of green bonds at the auction, against the notified amount of Rs 5,000 crore

Officials may argue that the scheme has outlived its purpose since India no longer has a troublesome current-account deficit

Scheme said to have outlived its purpose of reducing physical gold imports

Indications were that decision on this would be taken in September

A key reason for the current delay is that SGBs have become an expensive borrowing route for the government

The July Budget reduced the import duty on gold from 15 per cent to 6 per cent, lowering input costs for jewellers and deterring smugglers

Understandable if govt decided not to bear exchange and capital appreciation risks on SGBs anymore, but this would be a pity for investors who would no longer have this option to balance portfolios

Recently, SGB investors have expressed concerns due to market fluctuations and the government's decision to lower the customs duty on gold which may result in reduced returns on their investments

Sovereign gold bonds have caught the fancy of investors who bought Rs 27,031 crore worth of the bonds last fiscal, an amount more than four times invested in 2022-23 on the prospects of higher returns and tax benefits. The bonds bought by investors represented a whopping 44.34 tonne of gold during 2023-24. In 2022-23, Sovereign Gold Bonds (SGBs) representing 12.26 tonne of gold were purchased for Rs 6,551 crore. "The aggregate sum raised during 2023-24 amounted to Rs 27,031 crore (44.34 tonne)," said the annual report of Reserve Bank, which issues the bonds on behalf of the central government. During the fiscal ended March 2024, the bonds were issued through four tranches. Since the inception of SGB scheme in November 2015, a total of Rs 72,274 crore (146.96 tonne) has been raised through 67 tranches. The price of 24 karat per 10 gram of gold has gone up from about Rs 62,300 to Rs 73,200 in one year. SGBs are government securities denominated in grams of gold. They are substitute

The Reserve Bank of India (RBI) issues SGBs on behalf of the government