RBI Gold Bonds, also known as Sovereign Gold Bonds (SGBs), are financial instruments issued by the Reserve Bank of India (RBI) on behalf of the Government of India. These bonds are aimed at providing individuals with an opportunity to invest in gold in a convenient and secure manner.
Here are some key features of RBI Gold Bonds:
- Government-backed: RBI Gold Bonds are issued by the Government of India, making them sovereign-backed securities. This means they carry the full faith and credit of the Indian government.
- Denominated in grams of gold: The bonds are denominated in grams of gold, providing investors with an opportunity to invest in the precious metal without the need for physical possession.
- Fixed interest rate: RBI Gold Bonds offer a fixed rate of interest on the initial investment amount. The interest is paid semi-annually and is taxable as per the prevailing tax laws.
- Tenure and liquidity: The bonds typically have a tenure of 8 years, with an option to exit after the fifth year on interest payment dates. Additionally, they are listed on stock exchanges, providing investors with liquidity.
- Capital gains tax exemption: Investors can enjoy capital gains tax exemption on redemption if the bonds are held until maturity. However, if they are sold on the secondary market before maturity, capital gains tax will be applicable.