Sovereign Gold Bond Investors Reap Tax-Free Gains as RBI Sets Redemption Price at ₹8,624
Investors in the Sovereign Gold Bond (SGB) Scheme 2016-17 Series IV have experienced substantial returns as the Reserve Bank of India (RBI) announced a redemption price of ₹8,624 per unit. This series, issued in March 2017, had an initial issue price of ₹2,943 per gram, leading to a significant appreciation over the investment period.
The redemption price is determined based on the simple average of closing gold prices of 999 purity for the week preceding the redemption date, as published by the India Bullion and Jewellers Association Ltd. This method ensures that the redemption value reflects the prevailing market rates of gold.
In addition to capital appreciation, SGB investors benefit from a fixed annual interest rate of 2.50% on the nominal value, paid semi-annually. This interest income is taxable, but the capital gains realized upon redemption are exempt from tax, enhancing the overall attractiveness of the investment.
The SGB scheme, launched by the Government of India in November 2015, aims to provide investors with an alternative to physical gold. It offers a secure and efficient way to invest in gold without the challenges associated with storage and purity concerns.
The impressive returns from the 2016-17 Series IV underscore the potential benefits of investing in SGBs, combining capital appreciation with additional interest income, all within a tax-efficient framework.
