Thread by @BahlKanan

New issue of Sovereign Gold Bond launches today🤩

With the upside of Gold, you get 2.5% interest🤯

Here's all you need to know about #SGB🪙🧵👇

1/ What is a Sovereign Gold Bond (SGB)?

Instead of buying physical gold, the SGBs come in a Demat form

The value of these bonds increase with gold's value & vice-versa📈

No risk of theft or being defrauded with impure gold😌

Best Part🤩: The Govt and RBI back these bonds

2/ Why not physical gold?

Imagine you go out to purchase physical Gold for investment purpose

A. You doubt whether it’s pure

Thugs ditch tens of people with fake gold daily

In India, this problem is very rampant🥵

Keep reading👇

B. You pay making charges

Range: 3-25% of the value of gold purchased

Tanishq’s charges start from 8%

C. Resale value

Depends on how desperate you are to realise it

The discount on resale value be as low as 1% to even 20-30%

This is how bad your calculation can be like🥵👇

3/ Terms of SGBs

🔶 2.5% p.a. interest payable twice a year on your initial investment amount

🔶 Govt / RBI will redeem after 8 years of investment

However, you can redeem it after 5 years also

🔶 If held in Demat form, it can be sold to other investors also

4/ Minimum and Maximum Investment

🔶 At least 1 gram equivalent needs to be bought

Present 1 gm rate of gold is ₹5,410

🔶 Maximum of 4 Kgs per year by Individuals and HUFs

🔶 Maximum of 20 Kgs by Trusts and other entities

P.S. Only residents of India can buy SGBs

5/ Taxability

🔶 Interest

2.5% p.a. interest is taxable as per relevant slab rates to the investor

🔶 Capital Gains

EXEMPT, if held till maturity of 8 years🤩

Physical Gold will still be taxable

Taxable if you sell before maturity of 8 years.

Read more👇

6/ Capital Gains on SGB if sold before maturity

🔶 If sold within 3 years

Short term capital gains on profit applicable as per slab rate

🔶 If sold after 3 years but before maturity

Long term capital gains at 20% (after indexation)

Or 10% without indexation

7/ Saving GST

Now since, you've made it till here

You deserve to know the best part which top bank websites also miss to mention

GST on physical gold purchase is 3%

However, on SGB - No GST🤩

GST is applicable only on brokerage which your platform might / might not charge

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It took me 3+ hours to research and write on this topic🥲

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Disclaimer: Not an investment advice. Shared only for educational and awareness purpose.