Should you spend money on new Sovereign Gold Bond subject or purchase it on the trade?

I’m planning to spend money on Sovereign Gold Bonds. Please recommend whether or not I can buy them in a brand new subject or ought to I discover shopping for the identical from the secondary market. Please additionally share the professionals and cons of shopping for the SGB from a brand new subject or from the secondary market.

— Dharamveer

If you might be planning to spend money on Sovereign Gold Bonds, you’ve two choices to select from. Either you can apply for a contemporary subject, or you can additionally purchase them from the secondary market on a buying and selling platform. What are the variations between these two choices?

Let us perceive them.

First of all; if you’re eager to purchase from an unique subject, then they might not all the time be accessible. Sovereign Gold Bonds are issued in tranches and a difficulty is usually open for one week in a month. So, you might want to discover out when the following tranche is coming after which be able to spend money on them. However, if you’re in a rush and you might be prepared to purchase from the secondary bond market on a buying and selling platform you are able to do it any day. However, please do not forget that you’ll have to be happy with no matter portions are being supplied. They might not be the portions you might be on the lookout for. Also, the maturity dates could also be very totally different for the heaps which can be found on the market within the secondary market. Remember that you could be get an excellent deal in pricing should you spend money on the secondary market as a result of there could also be some misery promote by a number of the outdated/present SGB holders. Also, if you’re planning to carry your funding until maturity then it’s wonderful. Otherwise, if you would like any time liquidity, you might want to be ready that everytime you resolve to promote your SGB holding within the secondary market, you’ll have to be able to get discounted worth and generally, could have to attend for just a few days earlier than a purchaser turns up. However, for each the choices you want a demat account. Besides, you could know that tax advantages on Sovereign Gold Bonds accrue solely while you maintain your bonds until maturity.

If you promote your holding earlier than maturity, then the taxation will apply relying upon the interval of your holding. If you’ve held your bonds for lower than three years, be ready to pay tax at relevant charges on the good points made by you. However, when you’ve got offered your bonds after holding them for a minimum of three years, then you definately shall be taxed at a decrease charge of 20% of the achieve, and that too after making use of the indexation profit. But should you wait until maturity, then clearly, no matter achieve you’ve made is totally exempt from tax. If you retain all above elements in thoughts, you might proceed to purchase Sovereign Gold Bonds within the secondary market. However, amount and pricing won’t be beneath your management, and you’ll have to settle for regardless of the market is providing.

(Query answered by Rajiv Bajaj, Chairman & MD, Bajaj Capital Ltd.)

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