Sovereign Gold Bond
The government of India (GOI) had launched the Gold Bond plan for investors in November 2015 to reduce the demand for physical gold.
Under the Sovereign Gold Bond, individuals get a good chance to invest in gold but don’t require to purchase the yellow metal in physical form.
An individual can redeem their bonds in cash upon maturity.
Additionally, investors also get interested in their bonds at an annual rate of 2.5%.
Any citizens, HUF, trusts, universities, and charitable institutions can purchase these bonds.
These bonds are issued for 8 years but the RBI provides investors a choice to withdrawal after 5 years.
Sovereign Gold Bonds are sold by commercial banks, stock holding corporations, post offices, and stock exchanges BSE and NSE (like Zerodha Broking Ltd).
In this article, We will look the “How to buy & Sell Sovereign Gold Bond Zerodha”.
Read Sovereign Gold Bond Calculator: Return Calculation 2021
How to Buy Sovereign Gold Bond in Zerodha?
Time needed: 5 minutes
Zerodha site is a booking portal, making your trading activities simple and timely. The following are the steps to buy SGB:
- Zerodha Website
Firstly, To open an account online, you can sign up using your mobile number on Zerodha’s website.
- OTP Verification Process
You will receive a one-time password to your number and you can get begin with the process.
Next, You will be needed to enter your PAN card, bank account information, and other details to continue with the sign-up. - Zerodha Charges
You will have to open this account by paying a one-time charge of Rs.200 and you can complete the payment via Net-banking or UPI or Card payment.
- Place Order
Next place the order wherein you state the quantity of your buy. Your trade will be ended once you look at the message stating “The Order is Accepted”.
Note – You will have to pay a broker charge of 0.01% or Rs.20 whichever is lower.
Also Read Sovereign Gold Bond through SBI
How to Sell Sovereign Gold Bond in Zerodha?
Subscribers holding the SGBs in dematerialized form can sell it on the stock exchange if they need the amount before its maturity.
The price of the SGBs in the stock market will reflect the price of gold and the demand and supply of gold bonds.
The redemption price is based on an average of closing price of gold of 999 purity in 3 previous business days.
The SGBs can be prematurely redeemed after the expiry of 5 years from the date of issue.
The encashment can be done on the coupon-paying dates of the SGB.
The proceeds will be credited to the registered bank account.
Also Read How to Buy Sovereign gold Bond from ICICI Bank or ICICI Direct?
Sovereign Gold Bond Zerodha Dates
| S. No. | Tranche | Date of Subscription | Date of Issuance |
| 1. | 2023-24 Series I | June 19 – June 23, 2023 | June 27, 2023 |
| 2. | 2023-24 Series II | September 11-September 15, 2023 | September 20, 2023 |
Also Read Sovereign Gold Bond through Axis Bank or Axis Direct – Demo | How to Sell Sovereign Gold Bonds?
Gold Bond Taxation
- The interest of 2.5% received by you on your bond holdings is absolutely taxable.
- These bonds come with a lock-in period of 8 years.
Any capital gains (LTCG or STCG) arising at the time of redemption will be completely free from tax. - This is a key tax benefit that has been offered by the RBI to make the tax bonds more attractive and encouraging. Although, the tax treatment is unbeneficial if you exit the bonds premature than that.
- The first option can use the premature redemption option that opens at the end of 5 years where you can redeem your bonds.
- The next option is to sell your SGBs in the secondary market using the Zerodha application.
- SGBs issued will list on the national stock exchange with a unique ISIN on completion of 6 months from the date of the issue. In both these conditions, the capital gains will be taxable.
- The normal taxation definition of short-term capital gain (<3 years) and long-term capital gains(>3 years) will be applicable.
Also Read How to Buy Sovereign Gold Bond through Bank? | Key Features | Allotment
Gold ETF vs Gold Bond
Also Read Sovereign Gold Bond Tax-Exemption with Example – STCG | LTCG | TDS
| Minimum | Gold ETF The initial investment limit in gold ETF is 1 unit which is equivalent to 1g of gold. Gold Bond The minimum initial investment is 1 gram of gold. |
| How to invest | Gold ETF De-mat account. Gold Bond Banks, designated Post office, Stock holding corporation of India, De-mat account. |
| Maximum | Gold ETF No limit Gold Bond Maximum 4 KG for an individual as per rules for SGB 2020-21. |
| Long-Term Capital Gains Tax | Gold ETF LTCG applicable after 3 years Gold Bond LTCG is applicable after 3 years. (No capital gain tax if held till maturity). |
| Liquidity | Gold ETF Moderate* *Tradable on the exchange Gold Bond Moderate* *Tradable on the exchange Investors can sell it on the stock exchange if they need the funds before its 5-year maturity |
| Loan facility | Gold ETF No Gold Bond SGB certification is eligible to be used as collateral for loans from banks, financial institutions. Read Loan against Sovereign Gold Bond |
| Lock-in period | Gold ETF No Gold Bond 5 Year |
Also Read Sovereign Gold Bond through HDFC Bank & HDFC Securities – Demo | Certificate | Status