The Government of India, in consultation with the Reserve Bank of India, is going to launch new series of the Sovereign Gold Bond (SGB) Scheme, which will open for subscription from April 20. The Sovereign Gold Bonds will be issued in six tranches from April 20 to 4 September, according to a statement issued by the Ministry of Finance.
The Bonds, to be issued by the RBI on behalf of the Government of India, will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges such as BSE and NSE.
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
The minimum investment limit for Sovereign Gold Bond is 1 gram of gold, while the maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities, as notified by the government from time to time. The tenor of the Bond will be for a period of 8 years with exit option after completion of five years.
Here's all you need to know about the Sovereign Gold Bonds Scheme 2020-21:
The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. Know-your-customer (KYC) norms for the purchase of bond will be same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card, PAN or TAN, or Passport will be required. Every application must be accompanied by the 'PAN Number' issued by the Income Tax Department to individuals and other entities.
Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be Rs 50 per gramme less for those who subscribe online and pay through digital mode.
The Bonds will be denominated in multiples of gramme(s) of gold with a basic unit of 1 gramme.
The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.
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.
Minimum permissible investment will be 1 gramme of gold. The maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March) notified by the government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by government and those purchased from the secondary market. In case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.
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 Ltd.
Commission for distribution of the bond shall be paid at the rate of 1 per cent of the total subscription received by the receiving offices and receiving offices shall share at least 50 per cent of the commission so received with the agents or sub agents for the business procured through them.
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.
Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.