E-Paper
Sovereign Gold Bonds scheme opens for subscription today: Issue price, discount, taxes
The SGB scheme is issued by the Reserve Bank of India (RBI) on behalf of the government as part of the Centre’s market-borrowing programme.
The sixth and last tranche of the Sovereign Gold Bond (SGB) scheme for this financial year will open for subscription on Monday for five days.
The SGB scheme is issued by the Reserve Bank of India (RBI) on behalf of the government as part of the Centre’s market-borrowing programme.
Here is all about the latest gold bond scheme:
* The Sovereign Gold Bond Scheme 2020-21-Series VI will remain open till September 4.
* The issuance date of the sixth tranche of gold bonds will be September 08, 2020.
* RBI has fixed the issue price at 5,117 per gram.
* Those applying and making payment online for the Sovereign Gold Bond scheme will get a discount of ₹50 per gram. For such investors, the issue price of the gold bond will be ₹5,067 per gram of gold.
* Minimum permissible investment is 1 gram of gold. A minimum of one gram and a maximum of four kilograms of gold can be acquired by eligible individuals and HUFs in a financial year. Trusts and similar entities can purchase up to 20kg in a financial year.
* Sovereign gold bonds are government securities denominated in grams of gold. Investors will be issued a holding certificate for the same.
* People can buy the bonds from scheduled commercial banks (except small finance banks and payment banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and stock exchanges.
* Gold bonds have a maturity period of eight years with an exit option after the fifth year.
* The redemption price is based on the then prevailing price of gold - simple average of the closing price of gold of 999 purity of previous three business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
* If the gold bond is held in Demat form, it can be traded on exchanges, offering an exit route before five years, subject to liquidity. Bonds are tradable on stock exchanges within a fortnight of the issuance.
* Gold bonds can be used as collateral for loans.
* The bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
* The interest on Sovereign Gold Bonds is taxable but the capital gains arising out of redemption are exempted for individual investors.
* There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which they have paid for.
