The Soverign Gold Bonds are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. They are linked to the gold price and is thus expected to fetch the investors the same returns as that in case of physical gold.
- The Sovereign Gold Bonds will be available both in demat and paper form.
- The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
- They will carry sovereign guarantee both on the capital invested and the interest.
- Bonds can be used as collateral for loans.
- Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
- Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.In Sovereign Gold Bonds, capital gains tax treatment will be the same as for physical gold for an 'individual' investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
How can you buy it?
Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 2 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.
Where can you buy it?
Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.
Who is issuing the bonds?
The Bonds are issued by the Reserve Bank of India on behalf of the Government of India. The bonds are distributed through banks and designated post offices. This should make subscribing to the bonds an easy affair. During redemption, "the price of gold may be taken from the reference rate, as decided, and the Rupee equivalent amount may be converted at the RBI Reference rate on issue and redemption".