What are svg or Sovereign gold bonds ?
Bonds issued by RBI, based on 1 gram gold, those are equal to gold, no GST, and recurring annual interest 2.5% untill the bond gets matured. You can without demat/trading account. At banks or post office, even with small 1gram to 4kg per year.
1 lot = 1 unit/ 1 gram gold worth of 4.5kinr
Annual interest 2.5% paid semi-annually.
Limit for 1 year
Huf/ individual == 4kg / year
Tax: capital gain
Short term capital gain tax: within 1 -3 year(tax bracket, income added total income)
long term capital gain tax:10% with indexation benefit.
selling after 5 years attracts capital gain tax.
selling in secondary market stock exchange
attracts short-term or long term tax .
Sovereign= king (government RBI).
RBI Sovereign Gold Bond scheme
Substitutes for holding physical gold. Investors has to buy, redeem after maturity.
Physical gold vs SGB (Sovereign gold bonds)
Risk & cost of storage is eliminated in SGB.
Assumed market rate at redemption, Bonus
2.5% annual interest but with physical gold no such benefit.
GST: physical gold attracts but SGB. Doesn’t (18% saving)
Risk: loss of capital when market rates decline.
Where to buy Sovereign gold bonds?
at banks, post officees, stock exchange, agents.
for online application ₹50 offer per gram.
Loan on Sovereign gold bonds?
Yes, loan amount same as physical gold.
Trading SVG Bonds?
Tradable after RBI notified date.
Redemption of part holdings also possible as gram.
Is it better idea to buy Sovereign gold bonds instead of physical gold?
GST subsidy and 2.5% annual interest, no fear theft, no locker fees by bank.
However, if you want to wear occasionally, then physical gold is a good choice, but beware theives.
Also know about commodity trading and forex trading in india.