Sovereign Gold Bond FY21-22 Series-IX (Tranche 58) issue review

Published on Sunday, January 9, 2022 by Dilip Davda

• SGB FY22 Series-IX (Tranche 58) has fixed a price of Rs. 4786 per one gram.
• Online applicant will be eligible for upfront discount of Rs. 50 per gram.
• Investment for long term may be considered.
• This is the ninth offer for the FY21-22.

Sovereign Gold Bond (SGB) Series -IX (Tranche 58) for FY21-22 is opening for subscription on January 10, 2022, and will close on January 14, 2022. Issuance of these bonds will be done tentatively on January 18, 2022 and listings on BSE and NSE thereafter.

For the second half of FY22 it has planned just four series issue ad detailed hereunder:

RBI has fixed the price for SGB FY22 Series-IX (Tranche 58) at Rs. 4786 per one gram. Those who are applying online will get upfront discount of Rs.50 per gram and thus will have to pay Rs. 4736 per gram.

The gold bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. It is always advisable to apply for these SGB online to avail benefit of special discount for online applications.

The price of the bonds is fixed in Rupees on the basis of a simple average of the closing price of gold of 999 purities, published by the India Bullion and Jewellers Association Limited (IBJA) for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be Rs. 50 per gram less for those who subscribe online and pay through digital mode.

The bond will have an eight-year tenor, with an option to exit after the fifth year on the next interest payment dates. If held in Demat form, the bond will be tradable on exchanges. It can also be transferred to another investor who meets the criteria.

The minimum investment in the Bond is one gram, with a maximum subscription limit of four kilograms for individuals.

On the amount of the initial investment, the Bonds pay 2.50 percent (fixed rate) per year in interest. Interest will be credited semi-annually to the investor's bank account, with the final interest due along with the principal at maturity.

If one invests in a sovereign gold bonus, the government in India has exempted capital gains tax on the acquisition of gold. However, the interest earned is taxable. One can use indexing to lower the capital gain tax burden by trying to transfer (leave) the bond before maturity.

CONCLUSION

Gold prices have moved narrowly in the recent times, but considering future prospects, those who have surplus cash and are looking for long term rewards with some interest income may consider investment in these bonds. If bullion market sources are to be believed, Gold Prices are likely to touch new high during CY2022. Reduced offer price provides opportunity of averaging one's previous investments. (Apply)