First Series of Sovereign Gold Bonds For FY22 Opens For Subscription Today

The Reserve Bank of India (RBI) has announced that it will issue the first Sovereign Gold Bond (SGB) for the financial year 2022 starting June 20. The issue price has been fixed at Rs 5,091 in the physical format, while for online payment and applications, the price has been fixed at Rs 5,041. 

This SGB will run till June 24, 2022. The SGB certificate or bond in demat will be issued on June 28, 2022. The RBI said that there will be another SGB issue (2022-23 Series II) and that it will open on August 22, 2022, and run till August 26, 2022.

Read below to find out more details about this SGB Issue.

Who Should Invest In This SGB?

The current gold price on Multi Commodity Exchange (MCX) is Rs 50,853.00 per 10 grams or Rs 5,085.3 per gram of gold. Each SGB represents one gram of gold. So, if you directly compare it to the prevailing price of gold, the price of this particular SGB (2022-23- Series I) is actually available at a discount to the current gold price. 

So, if you are among those who want to take a long-term investment position in gold and would also like to get some interest-earning off it too, then you could consider this SGB issue, since if you hold it till maturity or at least till the RBI buyback window, which occurs from the fifth year onwards, the proceeds of gains will be tax-free. 

All SGBs have a fixed maturity period of eight years, and bear an interest of 2.5 per cent on the nominal amount payable semi-annually. But do keep in mind that the interest of 2.5 per cent payable semi-annually on these SGBs is taxable in the hands of the investor.

How To Buy These SGBs?

You can buy these SGBs through commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices notified by the RBI, and recognised stock exchanges, either directly or through agents.

You can make payment for these SGBs either through cash (maximum Rs 20,000), or demand draft or cheque or electronic banking.

If you are opting for the physical mode, then you will get an SGB certificate issued by the Government of India, and if you opt for the online mode, then you have the option will get the same SGB in dematerialised form or in physical certificate (depending upon your choice). For getting an SGB in the dematerialised form, you need to open a stock broking trading and demat account with any registered stockbroker in India.

Liquidity Option For These SGBs

For users who hold SGBs in the physical mode, they will have to wait till the RBI’s fifth-year buyback window in order to encash these SGB, and receive a tax-free income.

Users who hold these SGBs online, i.e. in a dematerialised form, can sell them on the stock exchange for immediate cash. But the same will be taxable. Investors of SGB in online mode can also participate in the RBI’s SGB buyback window, which runs from the fifth year onwards.

Click here to know more about when the past SGB issues were supposed to be bought back by the RBI.