The SGB Issue Price – The Reserve Bank of India announced that, the Sovereign Gold Bond Scheme 2021-22 – Series X will be open for subscription for the period from February 28 – March 04, 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.February 23, February 24, and February 25, 2022 works out to ₹5,109/- (Rupees Five Thousand One Hundred and Nine only) per gram of gold.
Further, Government of India, in consultation with the Reserve Bank of India, gives a discount of ₹50/- per gram less than the nominal value to those investors applying online mode. Further, the issue price of Gold Bond will be ₹5,059/- (Rupees Five Thousand and Fifty Nine only) per gram of gold for such investors who invest through online mode.
Also, the scheme offers benefits of 2.5% interest and exemption on capital gains tax on redemption. The government initially launched the sovereign gold bond scheme in November 2015.
Key Points about Sovereign Gold Bond (SGB)
- Resident Indian Individuals (Singly or Jointly), HUFs, Trusts, Universities and Charitable Institutions can invest in SGB.
- The minimum permissible investment is 1 gram of gold.
- The maximum limit is 4 kg for an individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal year (April – March) notified by the Government from time to time.
- The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchase from the secondary market.
- In case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.
- The tenor of the bond will be for a period of 8 years. It also have an exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
- Investors can earn an additional 2.50% interest per annum on the invested amount during the tenure. Interest shall be payable semi-annually.
- It is mandatory for investors to provide bank account details to facilitate payment of interest / maturity value.
- 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 the transfer of bond.
- Bonds are tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
- SGBs are also tradable in Stock Exchange (Units in Demat form), subject to series specific liquidity and price.
- You can also use SGBs as a collaterals for loans.