Sovereign Gold Bond Scheme Series IV 2023-24: A look at the prices SGBs were issued at

Sovereign Gold Bonds 2023-24: Sovereign Gold Bond (SGBs) Scheme Series IV has been launched, which is the last tranche for this financial year. The subscription for this new series will remain open until February 16. The bonds are priced at Rs 6,263 per gram of gold, with an added benefit of an instant discount of Rs 50 per gram for online applicants who choose to pay through digital channels.

SGBs one of the most favoured form of gold investment at present. The Reserve Bank of India (RBI) administers the SGB issue on behalf of the government as an alternative to purchasing physical gold. The SGBs are issued as Government of India Stock under Government Securities Act, 2006. Investors get a Certificate of Holding for the same when they invest in it. The SGBs will be eligible for conversion into demat form.

Gold has provided a modest 8% return over the past 10 years. However, it has the potential to shine when equity markets experience downturns. As a result, sovereign gold bonds could be a wise choice for investors seeking to safeguard their investments during these challenging times.

Here's a look at the issue prices of previous SGB Series

FY22 and FY23     Issue Date        Issue Price (Rs)  Current price* (Rs)

2021-22, Series I      May 25, 2021      4,777                 6,224
2021-22, Series II   June 1, 2021       4,842                6,224
2021-22, Series III   June 8, 2021       4,889               6,224   
2021-22, Series IV   July 20, 2021       4,807             6,224  
2021-22, Series V      August 17, 2021    4,790              6,224
2021-22, Series VI   September 7, 2021  4,732               6,224
2021-22, Series VII   November 2, 2021   4,761              6,224
2021-22, Series VIII  December 7, 2021   4,791              6,224  
2021-22, Series IX   January 18, 2022     4,786              6,224  
2021-22, Series X       March 8, 2022     5,109              6,224  
2022-23, Series I        June 28, 2022      5,091             6,224
2022-23, Series II     August 30, 2022    5,197            6,224
2022-23, Series III    December 27, 2022 5,409              6,224
2022-23, Series IV    March 14, 2023     5,611           6,224
2023-24  Series I         June 19, 2023           5,926            6,224
2023-24  Series II       September 11, 2023      5,923        6,224
2023-24  Series III      December 18, 2023       6,199        6,224
2023-24  Series IV      February 12, 2024       6,213          6,224

*Current price as on February 13, 2024

Returns on SGB Batch I

The first batch of Sovereign Gold Bonds (SGB) 2016 matured on February 8, 2024. The RBI recently announced the final redemption price at Rs 6,271 per unit of SGB, reflecting the simple average closing price of gold for the week of January 29-February 2, 2024, as per the SGB scheme guidelines. The Sovereign Gold Bonds 2016-I was issued at a price of Rs 3,119 per gram and was launched in February 2016.  It yielded around 101% gain for investors upon maturity.

The redemption price is ascertained in Indian rupees and will depend on the simple average of the closing price of gold of 999 purity over the preceding three business days from the date of repayment.

As per the SGB scheme guidelines, "The redemption price shall be fixed in Indian Rupees on the basis of the previous week's (Monday - Friday) simple average closing price for gold of 999 purity, published by India Bullion and Jewellers Association (IBJA)."

Buying SGBs

The SGBs will be sold through Scheduled Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges -- National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

Existing SGB series are available in the secondary market at a discounted price. Since SGBs have an eight-year holding period and there are a few buyers in the market, sellers may be forced to offer their investment at a lower price. Therefore, buying SGB from the secondary market may be a better idea. For instance, in 2023, previous SGB issues saw discounts of up to 6 per cent.

Tax treatment

The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of bond.

Also read: Sovereign Gold Bond Scheme 2023-24: Here are top 5 reasons to invest in SGBs over physical gold or gold ETFs

Also read: Sovereign Gold Bond Series IV FY24: How are SGBs taxed? Details here