The Indian government has announced the launch of Sovereign Gold Bonds (SGBs) in two tranches for the first half of the financial year 2023-24. The b
Key Highlights :
The first tranche of SGBs will be available for subscription from June 19-23, 2023, while the second tranche will be available from September 11-15, 2023. The bonds will be issued as Government of India Stock under the Government Securities Act, 2006 and will be eligible for conversion into demat form.
Eligibility
The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The minimum permissible investment will be one gram of gold, and 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) notified by the Government from time to time. In the case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.
Issue Price and Payment Options
The price of SGBs will be fixed in Indian Rupees on the basis of the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (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. Payment for the SGBs will be through cash payment (up to a maximum of ₹ 20,000) or demand draft or cheque or electronic banking.
Tenor and Redemption Price
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 redemption price will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity, of the previous three working days published by IBJA Ltd.
Interest Rate and Tax Treatment
The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. The interest on SGBs shall be taxable as per the provision 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 will be provided to long-term capital gains arising to any person on transfer of the SGB.
Tradability and Collateral
SGBs shall be eligible for trading. The SGBs will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks, and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges -- National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The SGBs can also be used as collateral for loans. The loan-to-value (LTV) ratio will be as applicable to any ordinary gold loan , mandated by the Reserve Bank from time to time.
KYC Documentation
Know-your-customer (KYC) norms will be the same as that for the purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN, or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
The government has introduced the Sovereign Gold Bond Scheme to provide investors with an opportunity to invest in gold without having to purchase physical gold. The scheme provides a safe and secure investment option with attractive interest rate and tax benefits. The bonds offer investors a convenient way to invest in gold and to benefit from its appreciation in value.
TITLE: All You Need To Know About The Two Tranches Of Sovereign Gold Bonds Launched By The Indian Government
