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The sale of the next installment of Sovereign Gold Bond (SGB) is starting from Monday i.e. June 20 for five days. The issue price of gold for this installment has been kept at Rs 5,091 per gram. This will be the first issue of the current financial year. Investment advisors believe that investing in sovereign gold can be a profitable deal amid fears of recession.
SGB is issued by RBI. Its value is in the weight of gold. If the bond is of 10 grams of gold, then the price of the bond will be the same as the price of 10 grams of gold. You can buy Sovereign Gold Bonds of a minimum denomination of one gram and a maximum of 4 kg in a financial year. The maximum limit for the trust is 20 kgs.
…then have to pay tax
- The maturity period of SGB is 8 years. There is no tax on profits made after this period.
- On withdrawal of money from sovereign gold after 5 years, 20.8% tax has to be paid on the gains made as long-term capital gains.
50 rupees discount on online purchase, interest will be available
50 per gram discount will be available on online application and digital payment in Sovereign Gold Bond i.e. for one gram of gold, you will have to pay only Rs 5,041 instead of 5,091. The special thing is that in this, 2.50 percent fixed interest is available every year on the issue price, which reaches your account every 6 months. However, tax is to be paid on it according to the slab.
You can also buy gold like this
- Physical Gold: You can also invest in gold through this. However, investing in the form of jewelery has to pay a making fee. Slab-based short term capital gains tax is levied if sold within 36 months of investing in physical gold. Selling gold after three years will attract tax at the rate of long term capital gains.
- Digital Gold: You can invest in it through different wallets and bank apps. One can invest in Digital Gold with a minimum of Rs. It attracts 20 per cent tax on returns along with cess and surcharge of 4 per cent on long-term capital gains. Returns for holding digital gold for less than 36 months are not directly taxed.
- Gold ETFs: One can also invest in gold through Gold Mutual Funds and Gold Exchange Traded Funds (ETFs). In this, gold is in virtual form and not in physical form. Both are taxed at the same rate as physical gold.
In the current situation, definitely invest money
In view of rising inflation and fall in the stock markets amid fears of recession, investing in gold for the long term can give profits. The yellow metal is getting support from the continuous depreciation of the rupee. Gold will be more expensive in the coming times. So this is a good time to buy Sovereign Gold. -Ajay Kedia, Director Kedia Advisory