Sovereign Gold Bond Scheme’s Series II tranche opens – all you need to know
Series II of the Sovereign Gold Bonds (SGB) scheme 2023-24 will be opened for subscription today i.e. from September 11-15, 2023, with a settlement date on September 20, 2023. The issue price of the bond during the subscription period will be ₹5,923 per gramme.
The finance ministry, with the Reserve Bank of India, has decided to allow a discount of ₹50 per gramme from the issue price to those investors who apply online and the payment is made through digital mode. For such investors, the issue price of the gold bond will be ₹5,873 per gramme.
Series I of the Gold Bond scheme 2023-24 was opened for subscription from June 19 to June 23, 2023.
The SGBs are sold through scheduled commercial banks -- except small finance banks, payment banks, and regional rural banks -- Stock Holding Corporation of India Ltd (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and NSE & BSE.
The SGB scheme was launched in November 2015 under the Centre's "gold monetisation" scheme. These are government securities denominated in grammes of gold and are the perfect alternative to investment in physical gold. These bonds, issued by the RBI on behalf of the government, eliminate several risks associated with physical gold. Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity.
The SGBs are restricted for sale to resident individuals, Hindu Undivided Families, trusts, universities, and charitable institutions, and are denominated in multiples of gram(s) of gold with a basic unit of One gramme.
The tenor of the SGB will be for a period of eight years, with an option of premature redemption after 5th year to be exercised on the date on which interest is payable. The minimum permissible investment is one gramme of gold, while the maximum limit of subscription shall be 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts, and similar entities per fiscal year (April-March).
In case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only. The price of Sovereign Gold Bonds will be fixed in rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by ₹50 per gram for the investors who subscribe online and pay through digital mode.
In terms of interest rate, the investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value. The SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio will be as applicable to any ordinary gold loan.
The interest on SGBs will be taxable as per the I-T Rules, though the capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of the SGB.
How to apply:
Bonds can be subscribed in application form Form A
Clearly state units (in grams) of gold, and name & address
Include valid ‘PAN details’
Submit applications at designated officers
Submission can be done directly or through agents
Get an acknowledgment receipt in Form B