I have been trading SGB in secondary market (BSE / NSE) quite a few times and I have few doubts.
I have noticed the symbol of same trench of SGB is different in BSE and NSE, like aug 2020 trench is called as SGBAUG28 in BSE where as SGBAUG28V-GB in NSE. Why is it so? do they belong to the same trench at all? if I buy either of them, am I essentially buying the same bond/trench?
Further more, I see there is a huge price difference between BSE and NSE of the same SGB issue. can I choose to buy the cheapest one available and still I am receiving the same bond ?
Can I buy an sgb issue from BSE at cheaper price and sell it in NSE at higher price?
No matter from where I buy, I am still entitled to received the same interest at 2.5%?
where I can see the accrued interest on SGB which I bought in Zerodha platform?
It is just the name difference, the underlying security is the same.
Price difference is down to Supply and Demand. You can buy where the price is lower, you will receive the same bond. As mentioned above, there is only difference in name between both exchanges, the underlying security is the same.
You can do this but you need to be aware of lack of liquidity.
It doesn’t matter if you purchase from BSE or NSE, you are entitled to receive interest.
Interest pay-out happens directly in your bank account, you can check your bank account statement for the same.
On huge price difference between BSE and NSE, most of the time it is misleading. This is because liquidity is very low and not enough trades are happening.
For eg. prices would be showing as BSE-4500 and NSE-4800 … giving a sense that there is arbitrage opportunity.
But when you actually try to buy at 4500, trade will not happen as there is no liquidity.
This is true not only for SGB but also for other illiquid NCDs.
I haven’t found any easy way for finding exact date but generally symbol of SGB has maturity month and year. Interest is paid out in 6 months multiple of that. eg SGBDC27VII-GB will be paying out interest in June and December of every year. For Exact date, I refer my bank statement.
No, I think tax exemption is available only when redemption happens on 8th year and not for premature redemption. So you will have to hold for 4 more years in your example.
Well, I haven’t seen the video but I have seen numerous articles on business website which indicates that redemption on maturity is tax free and premature redemption is not. One article from Mint below.
RBI website FAQ also says that " The capital gains tax arising on redemption of SGB to an individual has been exempted." But it is silent on premature redemption.
As such I think first SGB should be finishing 5 years somewhere in July-Aug this year. Only then there will be see clarity coming.
Also I believe this process of premature redemption is not going to be smooth. You will have to give application 30 days before the date and might need some efforts in getting proceeds. (That’s just my thought)
Check this page on the RBI website. In the table present on that page, there is a column which is called Commencement of premature redemption which lists the interest payment dates (as the Early exit option after 5 years can only be done on the Interest payment date). Starting from Tranche 10, it lists interest payment dates that are different from the issuance date (which is also an interest payment date) hence sharing both interest payment dates for every tranche. For the second interest payment date for Tranches 1-9, we can get some of that information from the BSE website (like for example, second interest payment date Tranche 1 is May 30th as per BSE website). Some Tranches (aka 2-3) don’t have any information present about the second interest payment date on the BSE website and those dates I have derived based on estimates. Also, the actual interest payment dates will likely differ a bit if that date is a banking holiday or a non-working day. I have compiled the data from the RBI website and BSE website in the table below -
@Avishek_Dey, even I haven’t received the interest for the SGBAUG28 bought from secondary market through zerodha. We shall wait till next Wednesday (17th feb) . After that we will raise the complaint with CDSL.
@ShubhS9, is there any mail id of CDSL for contact with respect to this issue??