Gold bond scheme: The third and fourth tranches will open for subscription for five days eachDid you know you can invest in gold without having to buy the yellow metal in physical form? The government-run Sovereign Gold Bond scheme is one such scheme, wherein the bonds are denominated in the multiple of one gram of gold.
The Sovereign Gold Bond or SGBscheme were announced in May this year, and the third and fourth series of the bonds under the scheme will be issued in August and September respectively.Sovereign Gold Bond is a certificate scheme in which the Reserve Bank of India issues bonds on behalf of Government of India, through scheduled commercial banks, Stock Holding Corporation of India (SHCIL), designated post office branches, and stock exchanges NSE and BSE.Investment in SGBs can be used as a collateral for loans.Who can invest? Resident individuals, Hindu Undivided Families, trusts, universities and charitable institutions can invest in the bond scheme.
The investors will be issued a holding certificate and the bonds will be eligible for conversion into demat form.( Physical gold, gold ETF or gold bond: Where to invest?)Important datesThe first and second tranches of the SGB scheme 2019-20 opened for subscription for five days each in June and July this year.
Similarly, the third and fourth tranches will open for five days each starting August 5 and September 9 respectively.TrancheDate of subscriptionDate of issuance2019-20 Series IIIAugust 05-09, 2019August 14, 20192019-20 Series IVSeptember 09-13, 2019September 17, 2019(Source: Ministry of Finance)Price and paymentThe issue as well as redemption prices are fixed on the basis of a simple average of closing prices of gold (99.9 per cent purity) listed by industry body IBJA for the last three working days of the week before subscription.
For example, for the third tranche of the gold bond scheme, a simple average of the prices from August 1 to August 3 will be taken for arriving at the price.
The bonds can be purchases against payment through cash, demand draft, cheque or electronic banking (net banking).For online subscribers, a discount of Rs 50 per gram is available on the issue price.Investment limitWhile the minimum investment allowed under the gold investment scheme is one gram, a maximum limit of 4 kilograms is applicable for individual investors and HUFs.
For trusts and other entities, the maximum permissible limit is 20 kilograms.
In case of joint holding, the investment limit (4 KG) is applicable to the first applicant only, according to an official statement.( Looking to buy gold? Here's all you need to know)Maturity periodThe bonds come with a term of eight years, with an exit option after the fifth yearto be exercised on the interest payment dates, according to the statement.Interest rateA fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value is applicable.Tax treatmentInvestment in the SGB will be subject to income tax laws.
However, the capital gains tax 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.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com.
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