Sovereign Gold Bond Redemption Price Set: RBI Announces Early Redemption Details

The Reserve Bank of India (RBI) has disclosed the redemption price for the premature withdrawal of Series I of Sovereign Gold Bonds (SGB) 2016-17. Launched for subscription from July 18 to 22 in 2016, this series was initiated at an issue price of Rs3119 per gram of gold.
 
As per an RBI notification dated July 28, 2023, the redemption price for early withdrawal has been fixed at Rs5950. The next scheduled date for the early redemption of this particular tranche is set for August 05, 2023, as announced by the RBI.
 
In accordance with this, the redemption price for Sovereign Gold Bonds will be determined based on the simple average of the closing gold price of 999 purity during the preceding week (Monday-Friday) before the redemption date. This information is sourced from the India Bullion and Jewellers Association Ltd (IBJA). Consequently, the redemption price for the upcoming early redemption on August 05, 2023, stands at Rs5950/- per unit of SGB. This figure is based on the average closing gold price during the week of July 24-28, 2023.
 
Series I of SGB 2016-17 has proven to be a lucrative investment for investors, offering an impressive absolute return of approximately 91% over a span of 6.5 years. The Compound Annual Growth Rate (CAGR) is estimated at around 9.7%. Moreover, investors can also benefit from a 2.5% interest, which is paid on a half-yearly basis. This interest is calculated at a rate of 2.50% on the issue price and is directly credited to the investor's bank on account half-yearly basis.
 
Sovereign Gold Bonds, issued by the RBI on behalf of the government, are available for subscription by resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The scheme's duration spans eight years, with the option for premature withdrawal after the completion of 5 years, on the interest payment date.
 
For those interested the minimum permissible investment in Sovereign Gold Bonds starts at 1 gram of gold. The maximum subscription limits are capped at 4 Kg for individuals and HUFs, while trusts and similar entities have an allowance of up to 20 Kg per fiscal year (April-March) as defined by the Government.
 
In terms of taxation, the interest earned from Sovereign Gold Bonds is subject to full taxation. However, any profits garnered from the redemption of these bonds are completely exempt from taxation. In cases where the bonds are transferred or sold, the profits obtained are taxable based on the holding period, either as long-term or short-term gains. There's also the option to opt for a flat tax rate of 10% on the profit, if this proves to be more advantageous than indexing the capital gains. For those looking to further optimize their investments, the exemption under Section 54F can be utilized for long-term capital gains, by reinvesting the proceeds in a residential property within the stipulated time frame.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
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What changes:
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Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder