New Delhi: The Government of India, in consultation with the Reserve Bank of India (RBI), has announced the issuance of Sovereign Gold Bonds (SGBs) in tranches for the year 2023-24. The first tranche is set to open on June 19, with subscriptions for series-I being accepted from June 19 to June 23, and those for series II from September 11 to September 15.
Key things about SGBs:
Availability:
The SGBs will be available for purchase through Scheduled Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognized stock exchanges such as the National Stock Exchange of India Limited and Bombay Stock Exchange Limited. However, Small Finance Banks, Payment Banks, and Regional Rural Banks will not be authorized to sell them.
Eligibility:
The Sovereign Gold Bond Scheme 2023-24 will be issued by the Reserve Bank of India on behalf of the Government of India and will only be available 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 SGBs will have a tenor of eight years, with an option for premature redemption after the fifth year, to be exercised on the date on which interest is payable.
Investment Limit:
The minimum permissible investment is one gram of gold, while the maximum limit of subscription is 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March), as notified by the government from time to time.
Investors will need to provide a self-declaration to this effect at the time of application. The annual ceiling will include SGBs subscribed under different tranches and those purchased from the secondary market during the fiscal year. In the case of joint holding, the investment limit of 4 Kg will apply to the first applicant only.
Price:
The price of SGB will be fixed in Indian Rupees based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. Investors who subscribe online and pay through digital mode will receive an issue price of SGBs that is less by ₹50 per gram.
Payment Mode:
Payment for the SGBs can be made through cash payment up to a maximum of ₹20,000, or demand draft, cheque, or electronic banking. The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006, and investors will receive a Certificate of Holding. The SGBs will be eligible for conversion into demat form.
Redemption Price:
The redemption price will be in Indian Rupees based on the simple average of the closing price of gold of 999 purity of the previous three working days published by IBJA Ltd.
Interest Rate:
Investors will receive compensation at a fixed rate of 2. 0 per cent per annum, payable semi-annually on the nominal value.
The SGBs can be used as collateral for loans, with the loan-to-value (LTV) ratio being the same as that for any ordinary gold loan mandated by the Reserve Bank from time to time.
Documents Required:
Know-your-customer (KYC) norms will be the same as those for the purchase of physical gold, and 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.
Taxation:
The interest on SGBs will be taxable as per the provisions of the Income Tax Act, 1961 (43 of 1961). However, the capital gains tax arising on the redemption of SGBs to an individual will be exempted, and indexation benefits will be provided to long-term capital gains arising to any person on the transfer of the SGB.
