Sovereign Gold Bonds

Sovereign Gold Bonds The Sovereign Gold Bond scheme, issued by the RBI on behalf of Government of India allows one to enjoy the benefits of investing in physical gold along with additional assured interests.

Here’s why one should invest

  • Freedom from hassle of storing physical gold

  • Earn additional 2.50% (Fixed Rate) interest p.a. on the amount of initial investment

  • Can be used as collateral for Loans & Tradable on exchange

  • Exempt from Capital Gains Tax on redemption

Key features:

  • Minimum investment in the Bonds shall be one gram with a maximum limit of subscribed 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

  • The tenor of the Bond will be for a period of 8 years, with exit option after 5th year to be exercised on the interest payment dates.

The features of the Bond are:

Sr No. Item Details
1 Product name Sovereign Gold Bond 2021-22
2 Issuance To be issued by Reserve Bank India on behalf of the Government of India.
3 Eligibility The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
4 Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
6 Minimum size Minimum permissible investment will be 1 gram of gold.
7 Maximum limit 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. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
8 Issue price 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.
9 Redemption price The redemption price will be in Indian Rupees based on previous 3 working days simple average of closing price of gold of 999 purity published by IBJA.
10 Interest rate The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
11 Collateral 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.
12 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.
13 Tax treatment 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.
14 Tradability Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.