MUMBAI: The Reserve Bank of India (RBI) has set the redemption value of the primary tranche of sovereign gold bonds (SGBs) at Rs4,837 per unit. As per a press launch issued by the central financial institution, the worth is predicated on easy common closing value of gold of .999 purity by Monday to Friday previous the date of redemption.
The first tranche was issued throughout 5-20 November, 2015, at a problem value of Rs2,684. This leaves buyers with 80% positive aspects (CAGR of 12.5%). By means of comparability, the Nifty CAGR over this era works out to about 13.5%. If we embody dividends, the Nifty return works out to be increased. The Nippon India ETF Nifty BeES, an ETF monitoring the Nifty has delivered a return of 14.85% over the previous 5 years.
SGBs mature eight years after their challenge date, nevertheless the RBI permits untimely redemption after the fifth yr. This untimely redemption window opens each six months on every coupon fee date. Premature redemption of the first tranche of SGBs grew to become attainable in November 2020 and the subsequent fee date is at the moment — 29 May.
Investors must submit a redemption request to the financial institution/put up workplace or agent they bought the bonds from at the very least sooner or later earlier than the fee date. Gains on SGBs are tax free on maturity.
However, there’s a lack of readability on taxation on untimely redemption. According to some specialists, in case of untimely redemption, the positive aspects can be taxed as long-term capital positive aspects and therefore buyers should pay a tax of 20% after adjusting the acquisition value for indexation.
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