Sovereign Gold Bond Scheme Series IV opens; issue price at ₹5,611/gm

The Series IV of Sovereign Gold Bond Scheme 2022-23 opened for subscription on March 6 and will go on till March 10, 2023. The issue price for this tranche has been fixed at ₹5,611 per gramme of gold.

"For such investors, the issue price of Gold Bond will be ₹5,561 per gramme of gold," the RBI said in a statement.

The RBI said the nominal value of the bond based on the simple average of the closing price for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. March 01, March 02, and March 03, 2023, works out to ₹5,611 per gramme of gold.

The government, in consultation with the Reserve Bank, has decided to offer a discount of ₹50 per gramme less than the nominal value to those investors applying online and making the payment via digital mode.

The Sovereign Gold Bond Scheme 2022-23 - Series III had opened for subscription during December 19-23, 2022. The nominal value of the bond was ₹5,409 per gram of gold.

The issue price for the second tranche of the sovereign gold bond scheme launched in August 2022 was ₹5,197 per gramme of gold, while the price of the first tranche was ₹5,091 per gramme.

The SGB scheme was launched by the Centre in November 2015, under the 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 will be redeemed in cash on maturity.

A person resident in India is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.

The bonds are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in the bond is one gram, with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In the case of joint holding, the limit applies to the first applicant.

The bonds bear interest at the rate of 2.50% (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.

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.

Interest on the bonds is taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits is provided to long terms capital gains arising to any person on transfer of bond.