What is the tax treatment for sovereign gold bonds? MintGenie explains
The upcoming installment of sovereign gold bonds (SGBs) is set to open for subscription this month. The subscription period for Series III in the 2023–24 cycle is slated for December 18–22, 2023, with Series IV scheduled for February 12–16, 2024, according to an announcement from the Ministry of Finance.
The release added, “The price of SGB will be fixed in Indian rupees based on a simple average closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period."
An escalating number of investors are showing a growing preference for investing in SGBs as a means of allocating funds to gold compared to alternative options of investing in gold. The distinctive feature of SGBs is the additional 2.5 per cent per annum interest, which complements the potential gains from the upward movement in gold prices.
The recent surge in gold’s popularity and price can be attributed significantly to inflation. Unlike currencies, which central banks can print at will, gold possesses a finite supply. This characteristic renders it a valuable asset during inflationary periods, as its worth typically rises in tandem with the prices of goods and services.
Furthermore, the yellow metal has an enduring history of maintaining its value. This makes it a secure haven for investors aiming to safeguard their purchasing power amid economic uncertainties. As paper currencies face devaluation due to inflation, investors seek refuge in gold as a hedge. This trend is particularly pronounced in nations experiencing high inflation rates.
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