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 the amount 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 tonnes of gold were purchased for Rs 6,551 crore.
“The aggregate sum raised during 2023-24 amounted to Rs 27,031 crore (44.34 tonnes),” said the annual report of the Reserve Bank, which issues the bonds on behalf of the central government.
During the fiscal year that ended in March 2024, the bonds were issued through four tranches.
Since the inception of the SGB scheme in November 2015, Rs 72,274 crore (146.96 tonnes) has been raised through 67 tranches.
The price of 24 karats per 10 grams of gold has increased from about Rs 62,300 to Rs 73,200 in one year.
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. These bonds are exempt from capital gains tax.
Besides, the bonds bear interest at a rate of 2.50 per cent (fixed rate) per annum on the initial investment amount.
SGBs are issued in denominations of one gram of gold and multiples thereof. The minimum investment should be one gram, with a limit of 4 kg subscription for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).
SGBs are sold through the offices or branches of nationalised banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Offices, Stock Holding Corporation of India Ltd. (SHCIL), and the authorised stock exchanges, either directly or through their agents.