SGB allotment Sovereign Gold Bonds (SGBs) are a popular investment option for those who want to invest in gold without the hassle of storing physical gold. The Reserve Bank of India (RBI) issues sovereign gold bonds (SGBs) on behalf of the Government of India, and these bonds are denominated in grams of gold. They offer several benefits, such as capital appreciation, interest income, tax exemption, and security.
The government periodically opens a window for the subscription of SGBs in different tranches. The latest tranche of SGBs, SGB 2023-24 Series IV, was open for subscription from February 12, 2024, to February 16, 2024. The issue price of the bond was Rs 6,263 per gram, with a discount of Rs 50 per gram for online applicants.
SGB allotment: Applied for the latest tranche of the sovereign gold bond?
If you have applied for the latest tranche of SGBs, you must be eager to know the allotment status of your application. The allotment of SGBs is usually done within 15 days of the closure of the subscription window. The issuance date of the SGB 2023-24 Series IV is February 21, 2024.
There are different ways to check the SGB allotment status, depending on the mode of application. Here are some of the methods that you can use to check your SGB issuance status:
Online applications through banks
If you have applied for SGBs online through your bank’s net banking or mobile banking facility, you can check the allotment status through the same platform. You need to login to your bank account and go to the SGB section. There you can see the details of your SGB holdings, such as the number of units, series, issuance date, maturity date, and interest payment dates. You can also download the holding certificate for your SGBs from the bank’s website.
Online application through stock brokers
If you have applied for SGBs online through a stock broker, such as Zerodha, ICICI Direct, HDFC Securities, etc., you can check the allotment status through the broker’s website or app. You need to login to your trading account and go to the SGB section. There you can see the details of your SGB holdings, such as the number of units, series, issuance date, maturity date, and interest payment dates. You can also download the holding certificate for your SGBs from the broker’s website or app.
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Offline application through banks, post offices, or agents
If you have applied for SGBs offline through a bank, post office, or an authorized agent, you can check the allotment status by contacting the respective entity. You need to provide your application number, PAN number, and other details to verify your identity. The entity will inform you about the status of your application and the issuance date of your SGBs. You can also collect the holding certificate of your SGBs from the entity after the issuance date.
Online applications through RBI website
If you have applied for SGBs online through the RBI website, you can check the allotment status by visiting the same website. You need to enter your application number, PAN number, and other details to access your application status. The website will show you the status of your application and the issuance date of your SGBs. You can also download the holding certificate for your SGBs from the website after the issuance date.
Why invest in SGBs?
SGBs are a smart way to invest in gold and enjoy its benefits. Here are some of the reasons why you should consider investing in SGBs:
SGBs offer capital appreciation linked to the market price of gold. You will receive the prevailing market value of gold at the time of redemption or premature redemption of the bonds.
SGBs offer interest income of 2.5% per annum on the nominal value of the bonds. The interest is paid semi-annually to your bank account.
SGBs offer tax exemptions on interest income and capital gains. The interest income is fully taxable as per your income tax slab, but there is no TDS applicable. The capital gains are exempt if you hold the bonds until maturity. If you transfer the bonds before maturity, you can avail of indexation benefits on the long-term capital gains.
SGBs offer the security and convenience of holding gold in paper or demat form. You do not have to worry about the purity, storage, or theft of physical gold. You can easily buy, sell, or redeem the bonds through online or offline channels.
SGBs offer liquidity and flexibility of exit. You can redeem the bonds after five years from the date of issue on the interest payment dates. You can also sell the bonds on the stock exchanges where they are listed, subject to market conditions.
How do I apply for SGBs?
SGBs are issued in different tranches throughout the year. You can apply for SGBs during the subscription period of each tranche. The subscription period is usually open for five days, from Monday to Friday. The RBI announces the issue price, interest rate, and other details of each tranche before the subscription period.
You can apply for SGBs through online or offline modes. You can apply online through your bank’s net banking or mobile banking facility, a stock broker’s website or app, or the RBI website. You can also apply offline through a bank, post office, or an authorized agent. You need to fill out the application form and provide your PAN number, Aadhaar number, and other KYC details. You also need to pay the application money through cash, check, demand draft, or electronic transfer.
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The minimum investment in SGBs is one gram of gold, and the maximum limit is 4 kg for individuals, 4 kg for HUFs, and 20 kg for trusts and similar entities per fiscal year. You can also avail a discount of Rs 50 per gram if you apply online and pay in digital mode.
How does SGB compare to other investment options?
SGBs are a form of investment in gold that offers several advantages over other options. Here are some of the ways SGBs compare to other investment options:
SGBs vs. physical gold: SGBs eliminate the risks and costs of storing, transporting, and verifying the purity of physical gold. SGBs also offer interest income and tax benefits, which physical gold does not.
SGBs vs. gold ETFs: SGBs have a lower expense ratio than gold ETFs, as they do not involve any fund management charges or brokerage fees. SGBs also have a higher interest rate than gold ETFs, which only track the price of gold. SGBs are more tax-efficient than gold ETFs, as they offer capital gains exemption on maturity and indexation benefits on transfer.
SGBs vs. PPF: SGBs have a higher return potential than PPF, as they are linked to the market price of gold, which can appreciate significantly over time. SGBs also have a shorter lock-in period than PPF, which has a minimum tenure of 15 years. SGBs are more liquid than PPF, as they can be traded on the stock exchanges or redeemed after five years.
SGBs vs. equity mutual funds: SGBs have a lower risk than equity mutual funds, as they are backed by the government and are not affected by market volatility. SGBs also have a lower correlation with equity markets, which makes them a good diversification option. SGBs are more tax-friendly than equity mutual funds, as they do not attract any capital gains tax on maturity or long-term capital gains tax on transfer.
What is the difference between SGB and gold mutual funds?
SGB and gold mutual funds are two different ways of investing in gold. However, there exist notable distinctions between them, including:
SGB stands for Sovereign Gold Bond, which is a government security denominated in gold. Gold mutual funds are mutual funds that invest in gold or gold-related instruments, such as gold ETFs, gold mining companies, etc.
SGB offers a fixed interest rate of 2.5% per annum on the nominal value of the bond, payable semi-annually. Gold mutual funds do not offer any fixed interest but only reflect the market value of gold or the underlying assets.
SGB has a maturity period of eight years, with the option of premature redemption after five years. Gold mutual funds have no fixed maturity period and can be redeemed at any time, subject to exit loads, if any.
SGB is backed by the government and is considered a safe and secure investment. Gold mutual funds are subject to market risks and may fluctuate in value depending on the performance of gold or the underlying assets.
SGB is exempt from capital gains tax if it is held until maturity or transferred after three years with an indexation benefit. Gold mutual funds are subject to capital gains tax as per the holding period and the tax slab of the investor.
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SGB can be purchased online or offline through banks, post offices, stock exchanges, or agents. Gold mutual funds can be purchased online or offline through mutual fund houses, brokers, or distributors.
What is the minimum amount required to invest in gold mutual funds?
According to one of the sources that I found, the minimum investment required for gold mutual funds is INR 100. Gold mutual funds are mutual funds that invest in gold or gold-related instruments, such as gold ETFs, gold mining companies, etc. They are a convenient and cost-effective way of investing in gold without holding physical gold. They also offer liquidity, diversification, and professional management benefits. However, they are subject to market risks and may not always reflect the exact price of gold. You can learn more about gold mutual funds and their comparison with other gold investment options from these sources.
Conclusion
SGBs are a lucrative investment option for gold lovers. They offer the benefits of capital appreciation, interest income, tax exemption, and security. They also eliminate the risks and costs of holding physical gold. You can easily check the allotment status of your SGB application through online or offline methods. You can also track the performance of your SGB holdings and redeem or sell them as per your convenience. If you want to invest in gold, SGBs are the way to go.
FAQs
Q: How is the issue price of SGBs determined?
A: The issue price of SGBs is determined by the RBI based on the average of the closing price of gold of 999 purity in the last three working days of the week preceding the subscription period. The prices are published by the IBJA.
Q: How is the interest on SGBs calculated and paid?
A: The interest on SGBs is calculated on the nominal value of the investment, i.e., the issue price of the SGBs. The interest is paid semi-annually to the investors’ bank accounts on the dates specified by the RBI. The interest is taxable as per the income tax slab of the investor.
Q: How can I redeem or sell my SGBs before maturity?
A: You can redeem your SGBs on the interest payment dates after the fifth year or on the maturity date. The redemption price will be based on the prevailing market price of gold at that time. You can also sell or transfer your SGBs before maturity, subject to market conditions and the availability of buyers. The sovereign gold bonds become tradable on stock exchanges approximately two weeks after their issuance. You can also transfer your SGBs to another eligible investor by executing a transfer deed.
Q: What are the risks and challenges of investing in SGBs?
A: The SGBs are a safe and secure investment option, as they are backed by the Government of India. However, there are some risks and challenges that investors should be aware of, such as:
Market risk: The SGBs are linked to the market price of gold, which may fluctuate due to various factors, such as demand and supply, global events, currency movements, etc. The investors may face a loss if the market price of gold falls below the issue price at the time of redemption or sale.
Liquidity risk: The SGBs have a lock-in period of five years, during which the investors cannot redeem them. The SGBs are also subject to the availability of buyers and sellers in the secondary market, which may affect their liquidity and price.
Opportunity cost: The SGBs offer a fixed interest rate of 2.5% per annum, which may be lower than the returns offered by other investment options, such as mutual funds, stocks, bonds, etc. Investors may miss out on higher returns by investing in SGBs.
Q: What are the advantages of SGBs over other forms of gold investment?
A: The SGBs offer several advantages over other forms of gold investment, such as:
No storage cost or risk: The SGBs are issued in paper or demat form, eliminating the need to buy or store physical gold. The SGBs are also free from the risks of theft, loss, or damage to physical gold.
No making charges or purity issues: The SGBs are free from the making charges and purity issues that are associated with gold jewellery. The SGBs are issued in grams of gold of 999 purity, ensuring the quality and quantity of the investment.
Tax benefits: The SGBs offer tax benefits to the investors, such as exemption from capital gains tax on redemption, indexation benefits on long-term capital gains on transfer, and no wealth tax or GST on SGBs.
Sovereign guarantee: The SGBs are backed by the Government of India, ensuring the security and credibility of the investment. The investors are assured of the market value of gold at the time of redemption or sale.
