Government in association with the Reserve Bank of India will come out with two tranches of Sovereign Gold Bond (SGB) during H1 FY24. Collection from SGB is part of overall borrowing program.

The first tranche will be open for subscription between June 19 and 23, while the second one will be between September 11 and 15. The SGB scheme was launched by the Government in November 2015, under Gold Monetisation Scheme. Under the scheme, an investor gets gold in electronic form for which she/he gets an interest rate every year and at the end of 8 years, is repaid value at the current price. Gain at the end of maturity does not attract capital gain tax, though annual interest is added to taxable income. Also, the indexation benefits will be provided for the long-term capital gains arising to any person on transfer of bond

The bonds will be issued in denominations of one gram of gold or multiples thereof. The minimum limit of subscription for the Bonds issued will be one gram and the maximum limit of subscription per fiscal year shall be of 4 kg for individuals and for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the Government from time to time.

“The Gold Bonds shall be eligible for trading,” a notification issued by the Finance Ministry said.

Also read: Govt mop-up through gold bond halves in FY’23

The issue price of Gold Bonds will be in Indian Rupees fixed on the basis of a simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited, for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be less than the nominal value by ₹50 per gram to those investors applying online and making the payment against the application through digital mode. The interest on the Gold Bonds will commence from the date of issue and to be paid at a fixed rate of 2.50 per cent per annum on the nominal value of the bond. The interest shall be payable in half-yearly rests and the last interest shall be payable along with the principal on maturity.

The Bonds will be repayable on the expiration of eight years from the date of the issue. However, premature redemption of Gold Bonds may be permitted after the fifth year from the date of issue of Bonds and such repayments. On maturity/premature redemption, the Bonds will be redeemed in Indian Rupees and the redemption price will be based on the simple average of the closing price of gold of 999 purity of the previous three working days, published by the India Bullion and Jewellers Association Limited.

Bonds issued under this Scheme may be used as collateral security for availing any loan. Such loans could be granted by marking a lien on Gold Bonds appropriately. The loan against Gold Bonds would be subject to the decision of the bank/financing agency, and cannot be inferred as a matter of right, the Ministry clarified.

Related Topics
comment COMMENT NOW