Sovereign Gold Bond Scheme 2021-22 first trench will open on 17 may know here how much benefecial this investment sgb vs gold etf vs physical gold SGB vs Physical Gold vs Gold ETF Do Better Investment The central government has decided to issue gold bonds in six trenches under the Sovereign Gold Bond Scheme 2021-22 between May 2021 and September 2021. Its first trench will open for subscription on May 17 and for this the issue price has been fixed at Rs 4777 per gram. On application and payment from online mode, a discount of Rs 50 per gram will also be available. In the minds of investors, there is a perception about gold bonds that it is the best option for investing in gold, but it is important to assess how beneficial it is. The issue price has been kept at Rs 4777 for the gold bond opening from May 17, i.e., it will be priced at Rs 47,770 for ten grams. To compare gold bonds, physical gold and gold ETFs, we assume that if 10 such amount of gold is taken, then after 8 years, how much return will we get in each type of investment. Here eight years have been taken because the maturity period of the gold bond is 8 years. Physical Gold 8 years ago, the price of gold was Rs. 29600, which is around 47700 at present, i.e. in the last 8 years, gold has got a return of about 60 percent. If this trend continues, then in the next eight years, the price of gold will be Rs 76,320. If we buy 10 grams of gold for Rs 47,770, then after 8 years we will have gold worth Rs 76,320. However, it depends here in which form you bought gold today, ie if you have bought it in the gold bar, then you can get its value a little bit, but if it is in the form of jewelery, then depending on the purity in the gold of Rs 76,320, its You will get the price. Apart from this, making charges plus GST will also be cut i.e. under no circumstances will you get a return of Rs 76,320. Apart from this, long term or short term capital gains tax will also be levied on returns. Gold ETF Looking at the last 8 years trend in Gold ETFs, an investment of 8 years ago has yielded an annualized return of close to 6.4 per cent (SBI Gold ETF) and if we assume that the same trend continues then 47700 in the next eight years. You will get a return of about 78400 on investment of Rs. Tax will also be payable on the ETF and the expense ratio will also have to be paid. In such a situation, the returns on it can be reduced. There is a benefit of indexation on investment in ETFs and if you take advantage of it, LTCG will be payable at the rate of 20 percent and if you do not take it, LTCG will be payable at the rate of 10 percent. This benefit is available only in ETFs. The rate of STCG is 15 percent, which is charged on holding of less than 3 years. Talking about SGB Bond SGB Bond, it will get interest at the rate of 2.5 per cent per annum, that is, till maturity, Rs 47,700 will get interest of Rs 19,800. However, tax will have to be paid according to the slab on it. At the time of 8 years of maturity, the investment value will be Rs 76,320, on which no tax will be paid. In such a situation, you can see here that the tax in SGB bond is to be paid only on the interest amount of Rs 19,800 and there will be no tax liability on the return. That is, you will get more than 90 thousand as an investment on this. Some rules regarding SGB will be able to invest a minimum of 1 gram of gold in these bonds. Individuals are allowed to invest a maximum of 4 kg, HUF 4 kg, and trusts and similar companies in bonds equivalent to a maximum of 20 kg of gold in a financial year. The maturity period of the bond is 8 years, after 5 years, there is an option to exit on the next interest payment dates. For this, the same rule of KYC is for physical gold. It is tax free on gold bond maturity. At the same time, the expense ratio is nothing. Being supported by the Indian government, there is no risk of default. (Vice President of IIFL Securities- Commodities & Research- Based on interaction with Anuj Gupta and Tax & Investment Expert Balwant Jain) --- etf, sgb, gold etf, Sovereign Gold Bond Scheme 2021-22, Sovereign Gold Bond Scheme, Sovereign Gold Bond Scheme, Sovereign Gold Bond Scheme Advantage, ETF Return, gold bond, gold bond scheme, etf vs sgb, ETF, SGB, Gold ETF, etf vs sgb, gold bond vs etf, --- 1st trench of sovereign gold bond May 17 Will be open for subscription and for this the issue price has been fixed at Rs 4777 per gram. --- Being supported by the Government of India, there is no risk of default of Gold Bonds.There is no risk of gold bond default being supported by the Indian government.

SGB ​​vs Physical Gold vs Gold ETF: The central government has decided to issue gold bonds in six installments under the Sovereign Gold Bond Scheme 2021-22 between May 2021 and September 2021. Its first trench will open for subscription on May 17, for which the issue price has been fixed at Rs 4777 per gram. On application and payment from online mode, a discount of Rs 50 per gram will also be available.

There is a perception about gold bonds that it is the best option to invest in gold, but it is important to assess how beneficial it is. The issue price has been kept at Rs 4777 for the gold bond opening from May 17, that is, it will be priced at Rs 47,770 for ten grams. To compare gold bonds, physical gold and gold ETFs, we have to see how much return we will get after 8 years on each of these types of investments. Here eight years have been taken because the maturity period of the gold bond is 8 years.

Physical gold

  • 8 years ago, the price of gold was Rs 29,600, which is around 47,700 at this time. That is, in the last 8 years, gold has got a return of about 60 percent. If this trend continues even further, then the price of 10 grams of gold should be close to Rs 76,320 in eight years.
  • The form in which you buy gold may have little effect on the returns. For example, if you have bought a gold bar, you will get better value while selling it, but if you have bought gold in the form of jewelery, while selling it, you can get a lower price based on the purity rather than its full weight.
  • On selling jewelry, making charges plus GST will also be deducted, that is, in no case will you get a return of Rs 76,320.
  • Apart from this, there will also be a long-term or short-term capital gains tax on the returns.
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Gold ETF

  • Looking at the previous trend in Gold ETFs, an annualized return of about 6.4 per cent (SBI Gold ETF) has been received on the investment made 8 years ago.
  • If this trend continues, the value of investment of 47,700 in the next eight years will be around Rs 78,400.
  • Tax will also have to be paid on ETFs and the expense ratio will also have to be paid. In such a situation, the returns on it can be reduced.
  • There is also the benefit of indexation on investing in ETFs. This benefit is available only in ETFs.

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SGB ​​Bond

  • SGB ​​bonds will get interest at the rate of 2.5 per cent per annum. That is, on the investment of Rs 47,700, you will get Rs 1192.50 every year and in 9 years, a total of Rs 9,540 will be available as interest. However, tax will have to be paid according to the slab on it.
  • At the time of 8 years of maturity, the investment value will be Rs 76,320, on which tax will not be paid.
  • In this way, Rs 47,700 invested in SGB bonds will add Rs 85,860 in 8 years. In this, tax liability will be made only on Rs 9540 of interest. It is clear that your returns in this scheme will be higher than both physical gold and gold ETAF.
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Some rules about SGB

  • The minimum investment in these bonds is equal to 1 gram of gold. Individuals are allowed to invest a maximum of 4 kg, HUF also 4 kg, and other institutions such as trusts and trusts invest up to a maximum of 20 kg of gold in a financial year.
  • The maturity period of the bond is 8 years, in which, after 5 years, there is an option to exit on the next interest payment dates.
    For this, the same rules of KYC are applicable for physical gold.
  • Gold bond maturity is tax free. There is nothing in the expense ratio.
  • Being supported by the Indian government, there is no risk of default.
    (Based on a conversation with IIFL Securities Vice President – Commodities & Research – Anuj Gupta and Tax & Investment Expert Balwant Jain)

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