What is sovereign Gold Bond

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Daya

Daya (Querist)
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23 April 2023 what is sovereign Gold ,
and what is tax treatment
is interest provides or only capital gain only

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 April 2023 1. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. he quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption.
2. The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest gets credited semi-annually to the bank account of the investor and the last interest payable on maturity along with the principal.
3. Interest on the Bonds are taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961).
4. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits provided to long terms capital gains arising to any person on transfer of bond.

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