Sovereign Gold Bond: What happens when SGB investor’s resident status changes to NRI - What are SGBs? (2024)

FAQs

Is NRI eligible for SGB in India? ›

A Non-Resident Indian cannot invest in Sovereign Gold Bonds as per the Foreign Exchange Management Act (FEMA), 1999.

Investors can gift or transfer an SGB to a friend, relative, or anyone else provided the eligibility criteria are met. These bonds can be transferred by executing an instrument of transfer that is available with the issuing agents.

What happens after SGB matures in 8 years? The interest and maturity will be credited to the bank account when the SGBs mature after eight years. The investor's bank account will be credited with interest on a semi-annual basis, and the final interest payment will be due together with the principal at maturity.

SGBs purchased via online mode

-Proceed to the "Portfolio" or "Holdings" section, where comprehensive details of your investments are available. -Within this section, locate the Sovereign Gold Bonds category to verify if the bonds have been allotted.

Although NRIs cannot invest in SGB after attaining their NRI status, if you are one of those NRIs who have already invested before becoming a Non-Resident Indian, you can retain the investment till the date of maturity of the bond.

NRIs cannot invest in gold through the SGB scheme once he achieves their NRI status. But. If an NRI had invested in SGB before he got his status as NRI, then he can hold the bond till the date of its maturity. It is highly beneficial for NRIs to invest in gold as it gives a good value for their money.

No, you cannot convert sovereign gold bonds to physical gold. The main purpose of SGB is to go for a long term investment. However, SGBs are listed on the exchange and can be traded if available in demat format, converting SGB to physical gold is not possible. SGB is always available in digital or paper format only.

As per RBI, sovereign gold bonds can be gifted or transferred to: Persons resident in India as defined under Foreign Exchange Management Act, 1999. Eligible investors, i.e., individuals, Hindu Undivided Family (HUF), etc.

Although the bond has an 8-year tenor, early redemption is permitted after the fifth year from the date of issue on coupon payment days. If kept in demat form, the bond will be tradable on the exchange.

On the date of maturity, the maturity proceeds are credited to the bank account provided by the investor during the application process. The bank account details for repayment will also be mentioned on the SGB certificates.

Is SGB better than FD? ›

Capital gains in SGBs are exempt from tax if held till maturity, while the interest earned is taxable. Interest earned on FDs is subject to taxation based on the applicable income tax slabs. However, in the case of tax-saver FDs, you can avail deduction on investments of up to Rs 1.5 lakh from your taxable income.

After 8 years, the SGBs mature, and the interest and redemption proceeds will be credited to the bank account. You will be informed about its maturity status one month before the maturity date.

The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Use certificate of holding from the issuing bank, Post Offices, or designated stock exchanges. Check for information about the allotment. Check your email for confirmation as well.

NRIs can invest in various types of bonds, including government securities, PSU bonds, and NRI bonds. Certain bonds like Bharat Bond ETF & FOF offer attractive interest rates and are backed by government entities​.

Corporate, Partnership, Limited Liability Partnership (LLP) and Non-Resident Indians (NRIs) account holders cannot buy SGBs in the primary market.

Reserve Bank of India has enabled NRIs to invest in Government of India bonds-G-sec. They are long-term securities. The tenure range for such bonds is from 5 to 40 years.

However, they should be aware of the Foreign Exchange Management Act (FEMA) guidelines. For instance, while NRIs can bring gold into India, there are certain duty charges applicable if the gold exceeds the permissible limit. - For Physical Gold: NRIs can purchase from reputed jewelers.