CONTACT US

084594-00000

About Us  :  Online Enquiry

Download

Sovereign Gold Bond Scheme 2021-22

Sovereign Gold Bond Scheme 2021-22

Why In News?

  • The Government has decided to issue Sovereign Gold Bonds from May 2021 to September 2021 after the consultation with RBI.

Key Points

  • The Sovereign Gold Bonds will be issued in six tranches from 17th May to September 2021.
  • The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL),designated post offices, and National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
  • The minimum permissible investment will be one gram of gold.
  • Investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.
  • The Bonds will be restricted for sale to resident individuals, Hindu Undivided Families, Trusts, Universities and Charitable Institutions.            Sovereign Gold Bond Scheme 2021-22
  • The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates.

What is Gold Bond?

  • Gold Bond is an initiative taken by the Government of India in accordance with the RBI to reduce the demand for physical gold as the increasing import of gold is affecting the growth and investment of the country.
  • A large amount of physical gold in the form of gold bars and coins are kept in every Indian household as savings.              Sovereign Gold Bond Scheme 2021-22

What are Sovereign Gold Bonds?

  • Sovereign Gold Bonds (SGBs) are government securities that are denominated in grams of gold.
  • They are substitutes of holding physical gold.
  • Investors have to pay the issue price in cash form and the bonds will be redeemed in the cash on maturity.
  • The Bond is issued by Reserve Bank on behalf of the Government of India.
  • It offers a superior alternative to hold gold in physical form, the risks and costs of storage are eliminated and investors are assured of market value of gold at the time of maturity and periodical interest.
  • The Bonds are sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL),designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

Features of the Sovereign Gold Bond Scheme 2021-22

  • The tenor of the Bond will be for a period of 8 years with exit option after5th year to be exercised on the next interest payment dates.
  • Minimum permissible investment will be 1 gram of gold.
  • The maximum limit of subscription shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time.
  • In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
  • Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
  • The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

Issue Price And Payment Of The Bond

  • Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be `50 per gram less for those who subscribe online and pay through digital mode.
  • Payment for the Bonds will be through cash payment (upto a maximum of `20,000) or demand draft or cheque or electronic banking.          Sovereign Gold Bond Scheme 2021-22

Issuance Form And Redemption

  • The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
  • The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity,of previous 3 working days published by IBJA Ltd.

Sales Channel

  • Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
  • Interest rate and Collateral
  • The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.          Sovereign Gold Bond Scheme 2021-22
  • Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

KYC documentation        

  • Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. 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.

 

ALSO READ: https://www.brainyias.com/at-1-bonds/

Mussoorie Times

Send this to a friend