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Sovereign Gold Bonds To Open For Subscription Soon: 10 Things To Know

Applications for Sovereign Gold Bonds will be accepted till March 3, 2017 and the Bonds will be issued on March 17, 2017.
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Sovereign Gold Bond or SGB is an alternative mode of investment to physical gold.
Sovereign Gold Bond or SGB is an alternative mode of investment to physical gold.
Looking to invest in gold bonds? Sovereign Gold Bonds - which is an alternative mode of investment to physical gold - will open for subscription on February 27 next. Launched in November 2015, the Sovereign Gold Bond or SGB scheme gives investors a choice to diversify portfolio without buying the metal in physical form. "Government of India, in consultation with the Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds 2016-17-Series IV," an official statement said. This would be the last offering for the current fiscal year.

Here are 10 things to know:

1) Sovereign Gold Bonds or SGBs, issued by the RBI on behalf of Government of India, will be soldthrough banks, Stock Holding Corporation, designated Post Offices and recognised stock exchanges - NSE and BSE.

2) Applications for Sovereign Gold Bonds will be accepted till March 3, 2017 and the Bonds will be issued on March 17, 2017.

3) While minimum permissible investment is one gram, eligible investors - resident Indian entities including individuals, HUFs (Hindu undivided families), trusts, universities and charitable institutions - will be able to buy securities worth a maximum of 500 grams per person per fiscal year. "A self-declaration to this effect will be obtained," the finance ministry said.

4) In case of joint holding, the limit of 500 grams will be applied to the first applicant only.

5) Sovereign Gold Bonds will be issued for a period of eight years with exit option from the fifth year to be exercised on the interest payment dates.

6) Price will be fixed on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association, a grouping consisting of gold dealers, traders and jewellers, for the week preceding the subscription period. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value.

7) "The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value," the ministry said.

8) The Bonds can be purchased by payment through cash (up to a maximum of Rs 20,000), demand draft, cheque or electronic mode.

9) The interest on gold bonds will 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. (Also readNew income tax rates, deductions applicable from April 1

10) The government has mobilised Rs 3,060 crore from the last five tranches of gold bonds.

(With inputs from PTI)

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