Sovereign Gold Bond: All you need to know

By Team Gullak

Nov 13, 2024

4 min read

If you have been investing in gold, you would have already come across the gold asset called Sovereign Gold Bond(SGB). With extra returns on top of gold’s annual returns these bonds have been one of the most popular gold investments in India.

In today’s article, we will delve into everything you need to know about the Sovereign Gold Bond scheme. Make sure to read to the end for the latest update on Sovereign Gold Bonds.

What is Sovereign Gold Bond(SGB)?

Sovereign Gold Bonds are securities denominated in gold grams. These bonds allow investors to benefit from gold price appreciation without physically owning the asset. Sovereign Gold Bond investors also benefit from extra 2.5% interest on their principal investment on top of gold’s annual returns. The Sovereign Gold Bond scheme is a 8 year long scheme and has a 5 year lock-in period.

Benefits of Sovereign Gold Bond

Sovereign Gold Bonds have 2 major benefits:

> Extra Returns: Investors get extra 2.5% interest every year on top of gold’s annual returns

> Tax Benefit: If you keep invested for 8 years, your capital gains on gold become tax-free.

Latest news on Sovereign Gold Bonds next Tranche

As per many finance experts & insights from news hours, Sovereign Gold Bonds are likely to get discontinued. This is because the extra interest from the Sovereign Gold Bond scheme was becoming expensive for the government.

What’s next for Sovereign Gold Bond investors?

If you’re looking for extra returns on gold, Gullak Gold+ might be worth checking out. Gullak Gold+ is a gold scheme from the Gullak app that enables you to grow your gold quantity by 5% every year. So, 100 gms invested in Gullak Gold+ becomes 105 gms in 1 year and 148 gms in 8 years, leading to a 50% increase in gold quantity and all of this 148 gms benefits from gold price increase. There are no lock-in periods, you can withdraw anytime as cash or gold coins or redeem gold jewellery at Gullak’s partner stores like Caratlane by Tanishq.

For better clarity, let us compare Gullak Gold+ against Sovereign Gold Bonds.

Table: Gullak Gold+ vs Sovereign Gold Bond scheme

In the above table, we can see that Sovereign Gold Bonds go tax free if kept for 8 years. However, even after considering the tax benefits, returns of Gullak Gold+ are higher than returns of Sovereign Gold Bonds. This is mainly because your extra gold on Gullak Gold+ gets compounded every year unlike the simple interest in case of Sovereign Gold Bonds.

Is Gullak Gold+ safe?

Investing in Gullak is 100% safe. Here's how Gullak ensures safety on your investments:

1. All the gold you purchase on Gullak is sourced, stored, and managed by Augmont, one of India’s biggest gold refineries. Augmont is NABL and BIS accredited and follows the India Good Delivery standard across platforms like NSE, BSE, and MCX.

2. Gullak guarantees 100% collateral protection for your investments, ensuring maximum security.

3. All investments are made in 24K 999 pure Hallmark gold & you get certificates of authenticity on all gold purchases.

4. Gullak is partnered with NPCI for payment solutions.

5. Gullak is ICICI Lombard for Insurance.

6. Gullak also collaborates with ClearTax to assist with tax filing.

7. Over 2 Million investors trust the Gullak app for their gold investments.

Concluding thoughts on Sovereign Gold Bond Scheme

Sovereign Gold Bonds are an excellent way to make extra returns on gold but the extra 5% gold pa on Gullak Gold+ makes the returns on Gold+ superior. Now, with the news of potential discontinuation of Sovereign Gold Bonds, checking out Gullak Gold+ becomes a no-brainer.