Sovereign Gold Bond

Investing in gold is much more easy and convenient now

Sovereign Gold Bonds (SGBs) are the perfect alternative to investment in physical gold.

Sovereign Gold Bond Scheme (SGB) was launched by Govt. in November 2015, under Gold Monetisation Scheme.

Under the scheme, the issues are made open for subscription in tranches by RBI in consultation with GOI.

The rate of SGB will be declare by RBI before every new tranche by issuing a Press Release.

Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s) as the PAN number of the first/ sole applicant is mandatory.

Features of SGB:

  • SGB issued by Reserve Bank India on behalf of the Central Govt.
  • The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
  • The tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
  • Minimum permissible investment will be 1 gram of gold.
  • The maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts
  • The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
  • Rs.50/- per gram discount than the nominal value to those investors applying online and the payment against the application is made through digital mode.
  • Payment for the Bonds will be through cash payment (up to a maximum of Rs. 20,000/-) or demand draft or cheque or electronic banking.
  • Nominations are available. In case the investment is on behalf of minor nomination facility is not available
  • The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
  • The Gold Bonds will be issued as Government of India Stocks under Government Security Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into Demat form.
  • The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 working days published by IBJA.
  • Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time. The lien on the bond shall be marked in the depository by the authorised banks.
  • Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

 

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