The Government of India, in collaboration with the Reserve Bank of India, has announced the issuance of Sovereign Gold Bonds (SGBs) in tranches for the Sovereign Gold Bond Scheme 2023-24. These bonds will be made available through various channels, including scheduled commercial banks, stock exchanges, designated post offices, and specified financial institutions. The following are the key features of the SGBs:
1. Eligibility: Resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions are eligible to purchase SGBs.
2. Denomination: SGBs will be issued in denominations of grams of gold, with the basic unit being one gram.
3. Tenor: The maturity period of the SGBs will be eight years, with an option for premature redemption after the fifth year, coinciding with the date of interest payment.
4. Minimum and Maximum Investment: The minimum investment allowed is one gram of gold. There is a maximum subscription limit of 4 kg for individuals and HUFs, and 20 kg for trusts and similar entities per fiscal year. This ceiling includes SGBs subscribed to under different tranches and those purchased from the secondary market.
5. Joint Holding: In the case of joint holding, the maximum investment limit of 4 kg will apply to the first applicant.
6. Issue Price: The issue price of the SGBs will be determined in Indian Rupees based on the simple average of the closing price of gold (999 purity) published by the India Bullion and Jewellers Association Limited (IBJA) over the last three working days preceding the subscription period. Investors who subscribe online and pay through digital mode will receive a discount of ₹50 per gram.
7. Payment Options: Investors can make payment for the SGBs through cash (up to ₹20,000), demand draft, cheque, or electronic banking.
8. Issuance and Conversion: SGBs will be issued as Government of India stock under the Government Securities Act, 2006. Investors will receive a Certificate of Holding, and the bonds will be eligible for conversion into demat form.
9. Redemption Price: The redemption price of the SGBs will be in Indian Rupees, based on the simple average of the closing price of gold (999 purity) for the previous three working days, as published by IBJA Ltd.
10. Sales Channels: SGBs will be sold 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.
11. Interest Rate: Investors will earn a fixed rate of interest of 2.50% per annum on the nominal value of the SGBs. The interest will be payable semi-annually.
12. Collateral: SGBs can be used as collateral for loans, subject to the loan-to-value (LTV) ratio applicable to ordinary gold loans, as mandated by the Reserve Bank of India.
13. KYC Documentation: KYC norms for the purchase of physical gold will be applicable for SGBs. Documents such as Voter ID, Aadhaar card/PAN or TAN/Passport, along with the PAN number issued by the Income Tax Department, will be required for every application.
14. Tax Treatment: The interest earned on SGBs will be taxable under the Income Tax Act, 1961. However, capital gains tax on redemption of SGBs by individuals is exempted. Long-term capital gains arising from the transfer of SGBs will be eligible for indexation benefits.
15. Tradability: SGBs will be eligible for trading on recognized stock exchanges.
16. SLR Eligibility: SGBs acquired by banks through lien, hypothecation, or pledge will be counted towards the Statutory Liquidity Ratio (SLR).
17. Commission: Receiving offices will receive a commission of 1% of the total subscription, which they will share with agents or sub-agents who facilitated the business.
It is important to note that the information provided here is based on the available details at the time of the article (20 june 2023) and may be subject to updates and revisions. Therefore, it is advisable to refer to the official notifications and guidelines issued by the relevant authorities for the most accurate and up-to-date information on the Sovereign Gold Bond Scheme.
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