By Rajni Pandey | June 13, 2024
Safety and Security
SGBs are issued by the Reserve Bank of India (RBI) on behalf of the Government of India, ensuring a secure and risk-free investment. Unlike physical gold, there are no concerns about theft, loss, or purity.
Image Credit: Canva
Attractive Interest Rates
Investors earn a fixed annual interest rate of 2.5% on the initial investment amount, paid semi-annually. This is over and above the potential appreciation in gold prices.
Image Credit: Canva
Capital Appreciation
SGBs are directly linked to the market price of gold. Investors can benefit from the rise in gold prices over the tenure of the bond, making it a good hedge against inflation.
Image Credit: Canva
Tax Benefits
The capital gains tax arising on redemption of SGB is exempted. Moreover, the interest earned on SGBs is taxable, but it can be beneficial when compared to other investments where both capital gains and interest are taxed.
Image Credit: Canva
No Making Charges
Unlike physical gold, there are no making charges or TDS (Tax Deducted at Source) when purchasing SGBs. This makes SGBs more cost-effective.
Image Credit: Canva
Easy Liquidity
SGBs can be traded on stock exchanges within a fortnight of issuance, providing liquidity to investors. They can also be used as collateral for loans.
Image Credit: Canva
Convenience
SGBs eliminate the hassle of storage, unlike physical gold. They can be held in demat or paper form, making it convenient for investors to manage their portfolio.
Image Credit: Canva
Investment in Tranches
SGBs are issued in tranches throughout the year. This allows investors to invest periodically and take advantage of varying gold prices.
Image Credit: Canva
Government Backed
Being a government-backed security, SGBs carry minimal risk. This backing ensures reliability and trust for the investors.
Image Credit: Canva
Subscription Discounts
The government often offers a discount on the issue price for online purchases, providing an additional incentive for investors to buy SGBs electronically.
Image Credit: Canva