The government has decided to issue two tranches of sovereign gold bonds (SGBs) during the first half of the current financial year.
The date for subscription for 2023-24 Series I is June 19-23, 2023, while for Series II is September 11-15, 2023, a finance ministry statement said.
Sovereign gold bond scheme: Key things to know
Eligibility
The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.
Denomination
The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of One gram.
Tenor
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.
Minimum size
The minimum permissible investment will be One gram of gold.
Maximum limit
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. A self-declaration to this effect will be obtained from the investors at the time of making an application for a subscription. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the secondary market, during the fiscal year.
Joint holder
In the case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.
Issue price
The price of SGB 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 option
Payment for the SGBs will be through cash payment (up to a maximum of ₹20,000) or demand draft or cheque or electronic banking.
Issuance form
The SGBs will be issued as Government of India Stock under Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be eligible for conversion into demat form.
Redemption price
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
The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.
Collateral
The SGBs can 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.
Tax treatment
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
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, it said.
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Updated: 15 Jun 2023, 09:21 AM IST