The SGB is an investment in gold in dematerialized form. It’s a good way to invest without having to worry about storage and purity issues. Gold on April 14, 2024, hit ₹72,500 per 10 grams, making the August and September 2024 Sovereign Gold Bond (SGB) sale bids increase significantly due to the current geopolitical tensions, leading people to rethink their gold selling strategies. ‘gold.
Here is how taxation is done:
As per the rules, the bond matures after eight years. In this case, no tax is levied on the increased value of the gold, but only tax on the interest earned would be charged. However, if a person sells his SGBs before the maturity period, tax is charged on the interest amount as well as the increase in the value of the gold.
Interest received semi-annually is added to income and is taxed according to the tax scale to which it belongs. For example, if you are in the 30% tax bracket, the SGB interest tax will also be 30% for you.
Although these bonds mature in eight years, there is a five-year option for early withdrawal by presenting the bonds to the RBI before interest or coupon payment. It is important to offer redemption of shares at the right time, although the tax would be the same as for any early withdrawal after three years. Therefore, give the bank or bond distribution company 30 days’ notice before the interest payment is due.
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