The finance ministry issued an order to open Series III of the Sovereign Gold Bond Scheme 2019-20 for subscription from August 5 to August 9 at an issue price of Rs 3,499 per gram. The settlement date for these orders will be 14 August 2019. The government has also decided to allow a discount of Rs 50 per gram from the issue price to investors who apply online and makes the payment through the digital mode. For such investors, the issue price of the gold bond will be Rs 3,449 per gram.
If you are planning to invest in the Sovereign Gold Bond Scheme 2019-20 Series III, here are all key details you should know:
— Sovereign gold bonds are government securities denominated in multiples of gram(s) of gold. They are a substitute for investment in physical gold.
— The investors in the gold bond scheme are compensated at a fixed rate of 2.5% interest per annum payable semi-annually on the nominal value.
— The tenor of the Bond will be for a period of 8 years with an exit option after the fifth year to be exercised on the interest payment dates.
— Along with the 2.5% interest, investors will earn returns linked to gold prices.
— These bonds carry sovereign guarantee both on redemption amount and on the interest.
— Minimum investment in these gold bond schemes is 1 gram, while maximum investment has been set at 4 kg for individuals, 4 kg for HUF and 20 kg for trust and similar entities per fiscal year.
— Gold bonds are sold through commercial banks, Stock Holding Corporation of India Ltd (SHCIL), designated post offices (as may be notified) and recognised stock exchanges like National Stock Exchange of India and BSE, either directly or through agents.
— Sovereign Gold bonds are available in both DEMAT and paper form.
— These bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by RBI.
— The interest on gold bonds shall be taxable as per the provision of Income Tax Act, 1961. The capital gains tax arising on redemption of sovereign gold bonds to an individual has been exempted. The indexation benefits will be provided to long-term capital gains (LTCG) arising to any person on transfer of bond before maturity.
— Gold bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by RBI from time to time.