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Personal Finance

Sovereign gold bonds open for subscription today; check issue price and other details here

Updated : August 31, 2020 11:52 AM IST

The last installment (series VI) of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday.

The last installment (series VI) of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 5,117 per gram of the yellow metal. Online subscribers can however secure these bonds at a discount of Rs 50 per gram.

This subscription of bonds will close on September 4, according to Reserve Bank of India (RBI).

Here's all you need to know about Sovereign Gold Bond (SGB) scheme:

Definition

SGB is issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.

Also read: Why you should not consider physical gold as an investment

Eligibility

These are restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

How is the price determined?

The price is determined on the basis of a simple average of the closing price 999-purity gold published by the Mumbai-based India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding subscription.

Also read: How are different forms of gold taxed?

Investment limits

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum subscription limit for SGBs is 4 kg for individual, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March).

Interest rate

Investment in SGB comes with an assured 2.5 percent interest payable to the investor.

Maturity

The tenor of the bond is for a period of eight years with exit option after fifth year to be exercised on the interest payment dates.

Should one invest?

According to Nish Bhatt, Founder and CEO, Millwood Kane International - an investment consulting firm, SGB is an effective way to invest in non-physical gold, wherein an investor does not have to worry about the storage of gold as it is in a demat form and there are no local taxes that a buyer needs to pay if buying physical gold.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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