Sovereign gold bonds will get at least 12% total return: Revenue Secy

The current interest rate for the Sovereign Gold Bond Scheme is 2.5 percent per annum

The sovereign gold bonds will get at least 12 percent total return, including interest, for the investors despite the Union budget cutting customs duties on gold and silver to 6 percent from 15 percent, Revenue Secretary Sanjay Malhotra said on July 30.

“I want to assure that despite the rate reduction in gold import duty, the sovereign gold bonds nearing final redemption will still get at least 12 percent total return, if not 12.7-12.8 percent. Even 12 percent return is not low,” Malhotra said at the post-Budget session at the PHD Chamber of Commerce and Industry.

Till now, the investors have received approximately 9-11 percent return per annum and on top of that an interest of 2.5 percent, a senior government official had earlier told Moneycontrol.

In July 2022, the import duty on gold was increased due to prevailing circumstances, including a worsening current account deficit (CAD) at that time as a measure to curb imports.

“We are now in a  comfortable position in the current account deficit,” he said.

Investors who participated in the SGB scheme 2016-17 -series 1, issued in August 2016, are nearing their final redemption, which is set for the first week of August 2024. The original issue price of Sovereign Gold Bond 2016-17 -Series I was Rs 3,119 with an annual interest rate of 2.75 per cent. The redemption price of SGBs is calculated using the average closing price of 999 purity gold as published by the India Bullion and Jewellers Association Ltd for three business days preceding the redemption date. Investors pay an issue price and the bonds get redeemed on maturity.

The current interest rate for the Sovereign Gold Bond Scheme is 2.5 percent per annum, the interest rate is fixed for the entire tenure of the bond, which is eight years. The gold bond interest is credited to the investor’s account every six months.

There hasn’t been an issue of Sovereign Gold Bonds since February this year. Moneycontrol had earlier reported on July 25 that the government may scale back or even discontinue the Sovereign Gold Bonds scheme, which it considers too expensive.