All about Sovereign Gold Bonds

If you have been buying physical gold for investment, then forget buying it in physical form as you incur expenditure for its safe custody.

For investment purposes, this is an excellent scheme by the Govt of India to discourage physical purchase of gold and consequently reduce imports and this scheme goes by name Sovereign Gold Bonds.

You get paid 2.5% interest paid semi-annually making it the effective interest of 2.515 %.

The capital gains are in sync with the prices of underlying Gold. Lockdown is 8
yrs, though the exit option is available after 5 yrs for select category of people as per age profile.

So apart from gaining from movement in Gold prices, one gets additional interest also (taxed at marginal tax rates). The capital gains at maturity (or after 5 yrs) are exempt from tax. The minimum investment is 1 gm and max 4 kg.

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