Sovereign Gold Bond tranche opens on Monday: Buy and hold for eight years to get low-risk, tax-free returns

financialexpress.com:

WITH SUBSCRIPTION TO the next tranche of sovereign gold bonds (SGBs) open from December 18 to December 22, investors should look at investing in these bonds and lock-in for eight years to earn tax-free returns. The issue price is fixed at `6,199 per gram of gold and investors will get a discount of `50 per gram on online purchase through digital payments. The final  tranche for this financial year will be open for subscription from February 12 to February 16.

Given the recent macroeconomic developments, gold will remain a preferred asset class and continue to attract investment as a proven hedge against other asset classes, say experts. Individuals should buy these bonds in each tranche which will be akin to investing in a systematic investment plan (SIP). The bonds come with a government guarantee on the principal investment. When combined with a SIP-like strategy, SGBs offer a disciplined and tax-efficient way to invest in the precious metal.

Appealing option
The bonds pay an interest rate of 2.5% every year and the interest amount is payable in half-yearly resets and the last interest will be payable along with the principal amount. The minimum amount of investment is one gram and the maximum limit in a financial year is four kilograms for individuals/ HUFs and 20 kgs for trusts. The interest earned on SGBs is taxed at the individual’s applicable tax rate, just like standard interest receipts. If they are sold on the secondary market, capital gains will be realised at market rates.

An investor will have to hold the bonds for eight years and will have an exit option from the fifth year which can be exercised on the interest payment days. The government had launched SGBs as a substitute to investing in physical gold and