Sovereign Gold Bond Scheme 2023-24 Ist Tranche Opens Today: Why You Should Subscribe The first tranche of Sovereign Gold Bond (SGB) scheme 2023-24 (Series I) opens today, June 19 for subscription and closes on June 23. The settlement date of the first tranche of SGB scheme 2023-24 Series is June 27.

The first tranche of Sovereign Gold Bond (SGB) scheme 2023-24 (Series I) opens today, June 19 for subscription. It will close on June 23, while the settlement date for this tranche is June 27. The issue price of these bonds is fixed at Rs 5,876 per gram of gold, with a discount of Rs 50 per gram for those buying online.

One can buy these bonds via Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges -- National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

Entrepreneur India takes a look at why subscribing to these bonds make sense

No need for storage: Unlike physical gold, no extra space and care is required for these bonds. And also they do away with the worry for safety as in the case of investment via gold coins and jewellery. You can invest for a minimum of 1 gm of gold through these bonds, while the maximum investment limit varies. It is restricted to 4 Kg for individuals and HUFs and 20 kg for trusts and similar entities.

Fixed interest rate: Under the scheme, the bond is paying an annual interest of 2.5 percent, which is payable half-yearly.This additional fixed interest rate of 2.5% per annum makes them more attractive. "This makes it very similar to holding physical gold with a 2.5% a year bonus," says Adhil Shetty, CEO, BankBazaar.com.

Premature withdrawal: While the duration of bonds is 8 years, they have a lock-in period of 5 years, after which they can be redeemed. But they need to exercised on the date on which interest is payable. "If you need to exit before 5 years, you will have to sell the SGB on the stock exchanges. So if the lack of liquidity doesn't impact you, you can invest a part of your portfolio in SGBs" says Shetty.

Safe: These bonds are fairly safe as they are backed by the Central Government of India and carries a government guarantee. There is no default risk. Says Shetty. "If you are looking for a way to safely invest in gold, Sovereign Gold Bonds (SGBs) are your best alternative, especially if you have a long investment window of 5-8 years. These are safe as they are issued by the government and the returns are proportional to the returns on gold."

Maturity amount tax-free: Any price appreciation on the gold price at the time of redemption of bonds is exempted from tax under this scheme. Also, these bonds are traded on the stock exchange. If sold within a year, the gains are considered as short-term capital gains and added to the taxable income, but after a year they are taxed at 10 per cent.

However, experts advise to go for gold only after assessing your existing portfolio and evaluating the returns expectations, risk appetite and liquidity requirements. "Ideally, gold should not form more than 5-10% of your investment portfolio, as gold prices tend to flat-line over long periods of time. So, gold alone may not be sufficient to meet your financial goals on time," adds Shetty.

Launched in 2015, the Sovereign Gold Bonds (SGBs) are government securities issued by the Reserve Bank of India (RBI) on behalf of the Government of India under the Gold Monetisation Scheme.

The next tranche will be issued between September 11 and 15, 2023, according to notification issued by Reserve Bank of India (RBI) .The settlement date for it will be September 20.