Sovereign Gold Bond calculator, Sovereign Gold Bond scheme 2023-24 series 2: The Reserve Bank of India (RBI) issues Sovereign Gold Bonds on behalf of Government of India. Introduced in the Union Budget 2015-16, SGBs are government-backed securities denominated in grams of gold. The gold bonds are linked to the market price of the yellow metal, wherein each unit is equivalent to the value of one gram of the precious metal. Many financial planners find SGBs to be an excellent substitute for holding gold in a physical form. The gold bonds are determined at 99.9 per cent purity, and come with a lock-in period of eight years with an option of premature withdrawals at the end of the first five years.
Do you know that besides a market-linked return, the gold bonds also let investors earn interest?
Gold bond interest
Interest at a fixed rate of 2.5 per cent per annum is applicable on the gold bonds. This interest is paid twice a year, and credited directly into the subscriber's bank account. The interest earned is taxable under income tax laws (income from other sources).
How to calculate the interest on Sovereign Gold Bonds (Interest rate calculator):
Here's an example to explain how the interest on SGBs is calculated.
Let's say, an investor, 'X', buys one unit of SGB for Rs 6,000. The investor will be eligible to interest at the rate of 2.5 per cent on this investment over the next eight years. Accordingly, the investor, X, is entitled to receive Rs 150 per annum (calculation below).
2.5 per cent of Rs 6,000 = Rs 150 (interest) Please remember that this amount will be paid semi-annually, meaning two tranches of Rs 75 each. Over a period of eight years, which is the maturity period of the Sovereign Gold Bonds, X will earn an interest of Rs 1,200 (calculation below).
Rs 150 per year x 8 years = Rs 1,200. This is how the interest is calculated on SGBs.
Here are some of the other important details to know about the Sovereign Gold Bond scheme:
Can you invest in Sovereign Gold Bonds now?
Yes, the SGB Scheme 2023-24 - Series II opened for subscription on September 11, 2023, and will close on September 15, 2023. So, you can invest in the gold bonds during this period.
Where to buy Sovereign Gold Bonds?
SGBs are sold through banks, Stock Holding Corporation of India, designated post offices, and exchanges NSE and BSE.
Who can invest in SGBs?
Resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions are eligible to invest in Sovereign Gold Bonds subject to certain limits. These bonds are redeemed in cash on maturity. SGBs come with a maturity period of eight years with an option of premature redemption after the fifth year.
ALSO READ: Why invest in the Sovereign Gold Bond scheme?
SGBs are redeemed in cash on maturity. Since SGBs are linked to the gold market price, investors will get the prevailing market price of gold on maturity.
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