Sovereign Gold Bond Scheme (SGB)
Sovereign Gold Bond Scheme was launched by Govt in November 2015, under Gold Monetization Scheme. In this scheme, the issues are made open for subscription in tranches by RBI in consultation with GOI. RBI notifies the terms and conditions for the scheme from time to time. The rate of SGB will be declared by RBI before every new tranche by issuing a press release. Sovereign Gold Bonds (SGBs) are issued by Govt. of India. It is the safest way to buy and store gold, and no physical lockers are required to store it. Investors get an assured 2.5% per annum interest.
- The bonds will be restricted for sale to resident Indian entities including Individuals (in his capacity as an individual, or on behalf of minor child, or jointly with any other individual), HUFs, Trusts, Universities and Charitable Institutions.
- The minimum permissible investment will be 1 gram of gold.
- The maximum limit of subscribed shall be 4 kg for an individual, 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. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchase from the secondary market.
- In case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.
- The tenor of the bond will be for a period of 8 years with an exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
- Investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.
- It is mandatory for investors to provide bank account details to facilitate payment of interest / maturity value.
- The interest on gold bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on the transfer of bond.
- Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
To buy this bond you had to be either of the following mentioned below:
- An Individual
- An individual on behalf of a minor
- An individual jointly with another individual
- Universities and Charitable Trusts
- As per RBI instructions “Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s)’ as the PAN number is mandatory.
- Investor ID to be furnished by existing investors for every fresh investment.
- In addition to PAN copy, any one of the following KYC document should be submitted,
- Aadhaar Card
- Driving License
- Voter ID