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Date – 19th June 2022 Published on

Sovereign Gold Bonds saw maximum traction in COVID-hit years

Investment in Sovereign Gold Bonds (SGBs) went up sharply during COVID-impacted years as investors looked for safer options amid volatility in equity markets with 2020-21 and 2021-22 accounting for nearly 75 per cent of total sales of the bonds since the inception of the scheme in November 2015.

Mr. Deepak Jain, Chief Executive, TaxManager.in said that SGBs are one of the safest modes of investment which not only gives capital appreciation but also gives interest payment along with government guarantee.

Through PTI Feeds

Date - 28th Feb 2022 Printed in Outlook Money

Three Things To Keep In Mind Before Investing In RBI’s Sovereign Gold Bonds

Interest income is taxable It Is Not Meant For Aggressive Returns SGBs offer capital appreciation as well as government-guaranteed interest payment. However, do note that the interest on the bonds is 2.5 per cent, so one should not expect aggressive or high returns.

Invest In A Limited Quantity SGBs are a way to invest in gold without having to face the difficulties that come with investing in physical gold. “In your investment portfolio, SGBs should not be more than 5-8 per cent of the total investments. Looking at the current political and economic scenario, including the Russian and Ukrainian War, since the equity-driven market is choppy, it is advisable to invest some part of your wealth in SGBs for assured returns along with capital appreciation,” says Deepak Jain, CEO, TaxManager.in, a tax e-filing and compliance management portal.

Consider The Tax Involved Unlike various other investments that come with tax benefits, interest earned on SGBs are taxable. “The interest earned from SGBs is treated as ‘income from other sources’ and taxed at the applicable income tax rates as per the tax slab the investor falls in. But no TDS (tax deducted at source) is deducted on the interest earned on SGB,” adds Jain. Long-term capital gains tax of 20 per cent with indexation applies if you hold the SGB for more than three years. (The bond’s maturity is eight years.) If you redeem only after the bonds mature, “no capital gains tax is applicable,” adds Jain...

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