The ninth tranche of Sovereign Gold Bond 2021-22 has opened for subscription on Monday. If you are looking for a cost-effective way to invest in gold, then you might be interested in the Sovereign Gold Bond scheme. The central bank has fixed the issue price of ninth tranche of Sovereign Gold Bond scheme at Rs 4,790 per gram. Under Sovereign Gold Bond scheme, the Reserve Bank of India issues bonds linked to the market price of gold on behalf of the government.
All you need to know about Sovereign Gold Bond Scheme opened on January 10
1) Introduced in 2015, the Sovereign Gold Bonds aimed to bring a change in the perspective of purchasing gold for financial investment.
2) Who can buy Sovereign Gold Bond Scheme?
Resident individuals, Hindu Undivided Family (HUF)s, Trusts, Universities and Charitable Institutions are eligible to apply for the subscription of the bonds.
The bond will be tradable on exchanges, if held in demat form. A specific request for the same must be made in the application form itself. It can also be transferred to any other eligible investor.
3) Sovereign Gold Bond Scheme: Issue Price
The Reserve Bank of India fixed the issue price at ₹4,786 per gram. The issue price of the gold bonds are derived from the simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last three business days of the week preceding the subscription period.
“The Sovereign Gold Bond Scheme 2021-22 – Series IX will be open for subscription for the period from January 10, 2022 – January 14, 2022. The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. January 05, January 06 and January 07, 2022 works out to ₹4,786/- (Rupees Four thousand seven hundred and eighty-six only) per gram of gold,” the central bank said in a statement.
4) Sovereign Gold Bond Scheme: Where to Buy
Individuals can buy gold bonds from commercial banks, Stock Holding Corporation of India Limited (SHCIL), post offices designated by RBI and recognised stock exchanges, either directly or through agents.
5) Sovereign Gold Bond Scheme Discounts
A customer can apply online through the website of the listed scheduled commercial banks. The issue price of the gold bonds will be ₹50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.
6) Sovereign Gold Bond Investment
The bonds are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in the gold bonds shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities. In case of joint holding, the limit applies to the first applicant, the central bank clarified.
7) Sovereign Gold Bond Scheme Interest
The interest on the bonds is fixed at 2.50 per cent per annum. The interest will be credited semi-annually to the bank account of the investor and last interest will be paid on maturity along with the principal. According to the Income Tax Act, 1961 (43 of 1961), the interest is taxable. There will be no capital gains tax on redemption of the sovereign gold bonds.
8) Sovereign Gold Bond Maturity Period
The tenor of the bond is 8 years. Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond, the RBI said. The banks allow early encashment or redemption of the bond after fifth year from the date of issue on coupon payment dates.
9) Sovereign Gold Bond Allotment Status
If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he or she will receive the allotment, the bank said.
10) Sovereign Gold Bond Scheme Tax
The interest that you earn from Sovereign Gold Bonds is taxable according to the applicable tax bracket. However, there is no Tax Deducted at Source or TDS. “These gold bonds have a maturity period of eight years with the option for an early exit after five years. The capital gains earned at the time of maturity of Sovereign Gold Bonds are entirely tax-free. If you exit the Sovereign Gold Bonds before maturity through the secondary market the capital gains are taxed in a similar way as physical gold or Gold ETFs,” explained Archit Gupta, founder and chief executive officer, ClearTax.
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