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The sovereign gold bonds are government securities denominated in grams of gold and they are issued by the RBI.
The sovereign gold bonds are government securities denominated in grams of gold and they are issued by the RBI. The sovereign gold bond scheme was launched in November 2015 with the objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of the yellow metal, into financial savings. Here are the key things to know about the sovereign gold bond scheme:
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Who can invest:
The sovereign gold bond can be issued to resident Indian individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
How to invest: The application form will be provided by the issuing banks/SHCIL offices/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facility. Every application must be accompanied by the ‘PAN Number’.
Subscription price: The RBI has set the price at Rs 3,890 per gram, with a discount of Rs 50 per gram for those investors applying online and making payment for the purchase of the bond through digital mode. Payment can be made through cash (up to Rs 20,000)/cheques/demand draft/electronic fund transfer.
Subscription limit: Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. The minimum investment in the bonds is one gram with a maximum limit of subscription of 500 gram per person per fiscal year (April-March). The maximum limit of subscription is 4 kg for individual and Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities per fiscal.
Interest payment: The interest on the bonds will be payable at the rate of 2.50 percent (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.
Redemption: Gold bonds shall be redeemed in Indian rupees and the redemption price shall be based on a 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.
Taxation: Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond. The capital gains tax arising on redemption of SGB to an individual has been exempted.
First Published: Sept 11, 2019 11:23 AM IST