The government has decided to issue two tranches of sovereign bonds gold bonds (SGB) during the first half of the current financial year.
The subscription date for Series I 2023-24 is June 19-23, 2023, while for Series II is September 11-15, 2023, a statement from the Ministry of Finance said.
Sovereign Gold Bond Program: Key Things to Know
Eligibility
The sale of SGBs will be limited to resident individuals, HUFs, trusts, universities and charitable institutions.
Denomination
SGBs will be denominated in multiples of gram(s) of gold with a base unit of one gram.
Tenor
The tenure of the SGB will be for a period of eight years with an early repayment option after the 5th year to be exercised on the date on which interest is payable.
Minimum size
The minimum investment allowed will be one gram of gold.
Maximum limit
The maximum subscription limit is 4 kg for individuals, 4 kg for HUFs and 20 kg for trusts and similar entities per financial year (April-March) notified by the government from time to time. A self-declaration to this effect will be obtained from investors at the time of the subscription request. The annual ceiling will include SGBs subscribed under different tranches, as well as those purchased in the secondary market, during the financial year.
Co-owner
In the case of co-ownership, the investment limit of 4 Kg will be applied only to the first applicant.
Issue price
The price of SGB will be fixed in Indian Rupees based on the simple average of the closing prices of 999 purity gold, published by the India Bullion and Jewelers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be reduced by ₹50 per gram for investors who subscribe online and pay digitally.
Payment terms
Payment of SGBs will be made in cash (up to a maximum of ₹20,000) or by demand draft, by check or by electronic banking.
Delivery form
The SGBs will be issued as shares of the Government of India under State securities Act of 2006. Investors will receive a certificate of holding for this. SGBs can be converted into demat form.
Redemption price
The redemption price will be in Indian Rupees, based on a 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 be remunerated at a fixed rate of 2.50 percent per annum, payable semi-annually on the face value.
Collateral
SGBs can be used as collateral for loans. The loan-to-value (LTV) ratio will be that applicable to all gold loanmandated by the Reserve Bank from time to time.
KYC Documentation
Know your customer (KYC) standards will be the same as those applicable to the 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.
Tax treatment
Interest on SGBs is taxable in accordance with the provisions of the Income Tax Act, 1961 (43 of 1961). Capital gains tax resulting from the repurchase of SGB from an individual is exempt. The benefits of indexation will be granted to long-term capital gains made by any person upon transfer of the SGB.
Negotiability
SGBs will be eligible for negotiation.
SGBs will be sold through Scheduled Commercial Banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices and recognized stocks. stock exchanges – National Stock Exchange of India Limited and Bombay Stock Exchange Limited, it said.
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