The government would issue gold bonds every month from October 2019 to February 2019, it said on Monday. The issuance of gold bonds will be under the SGB or Sovereign Gold Bonds scheme 2018-19, the Ministry of Finance said in a statement. SGBs are government securities, denominated in grams of gold, that enable an investor to park funds in the yellow metal without having to deal in the precious metal in physical form. The per unit price of gold bonds is linked to the market value of gold. Gold bonds are redeemed in cash on maturity.
Here are 10 things you need to know about the gold bond scheme (Sovereign Gold Bonds 2018-19):
1. Who issues gold bonds? The sovereign gold bonds are issued by the Reserve Bank of India on behalf of government.
|Tranche||Period of Subscription||Date of Issuance|
|2018-19 Series II||October 15-19, 2018||23-Oct-18|
|2018-19 Series III||November 05-09, 2018||13-Nov-18|
|2018-19 Series IV||December 24-28, 2018||1-Jan-19|
|2018-19 Series V||January 14–18, 2019||22-Jan-19|
|2018-19 Series VI||February 04-08, 2019||12-Feb-19|
|(Source: Ministry of Finance)|
2. Where can one buy gold bond? Retail investors can buy gold bonds through banks, designated post offices, the Stock Holding Corporation of India, and stock exchanges NSE and BSE.
3. Who is eligible to buy SGB? Resident entities such as individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions are eligible to purchase gold bonds.
4. Minimum investment: The sovereign gold bond is denominated in multiples of one gram of gold, which is the minimum permissible investment limit.
5. Maximum investment: A subscriber is allowed a maximum limit of 4 kilograms in case of individuals and HUFs in a financial year. The upper limit of investment in case of trusts and similar entities per fiscal year is 20 kilograms. The annual ceiling includes bonds subscribed under different tranches in the initial issuance and those purchased from the secondary market, according to the release.
6. Maturity period: Gold bonds comes with a maturity period of eight years. The investor gets an opportunity to exit the bond in the fifth, sixth and seventh year on the interest payment dates, according to the statement.
7. Gold bond issue price: The price will be fixed on the basis of an average of closing gold prices (99.9 per cent purity) published by industry body IBJA (India Bullion and Jewellers Association) for the last three working days of the week preceding the subscription period. The issue price will be Rs 50 per gram less for online subscribers making payment through a digital mode.
8. Interest rate: SGBs fetch interest at the rate of 2.5 per cent, payable semi-annually.
9. Income tax benefit: The interest on SGB investment is taxable under the Income Tax Act, 1961 (43 of 1961). However, any capital gains tax arising on redemption of the SGB to an individual has been exempted.
10. Documents required: The finance ministry said the KYC (know your customer) norms applicable to purchase physical gold will apply to gold bonds. "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 the investor(s)," the statement added.