Investors Get Opportunity To Invest In Sovereign Gold Bonds
The government has announced its decision to release two sets of sovereign gold bonds (SGBs) in the first half of the current financial year.
According to a statement from the finance ministry, the subscription date for the 2023-24 Series I is set for June 19-23, 2023, while Series II will be available for subscription from September 11-15, 2023.
Restrictions have been imposed on the sale of SGBs, limiting it to resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.
It has been announced that the Sovereign Gold Bonds (SGBs) will now be denominated in multiples of grams of gold, with a basic unit of one gram.
It has been announced that the tenor of the SGB will be for a duration of eight years, with a choice of premature redemption after the fifth year. This option can be utilized on the date on which interest is to be paid.
One gram of gold will be the minimum permissible investment. Government regulations have set the maximum limit of subscription for gold at 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March).
When there is shared ownership, only the initial applicant will be allowed to invest up to 4 kg.
It has also been announced that the price of SGB will be determined in Indian Rupees. This will be based on the simple average of the closing price of gold of 999 purity, as issued by the India Bullion and Jewellers Association Limited (IBJA).
The calculation will be made for the last 3 working days of the week preceding the subscription period.
The investors who subscribe online and pay through digital methods will now be able to purchase SGBs at a reduced issue price of ₹50 per gram.
SGBs can be paid for through various methods including cash payment (with a maximum limit of ₹20,000), demand draft, cheque, or electronic banking.
Government of India Stock, known as SGBs, are set to be issued under the Government Securities Act of 2006. Investors are set to receive a Certificate of Holding for their shares. SGBs to be eligible for converting into demat form.
IBJA Ltd has announced that the redemption price for gold of 999 purity will be determined based on a simple average of the closing price of the previous three working days. The redemption price will be in Indian Rupees.
Investors are set to receive a fixed rate of 2.50 percent per annum, which will be paid semi-annually on the nominal value as compensation.
SGBs have been found to be useful as collateral for loans. The Reserve Bank mandates loan-to-value (LTV) ratio for ordinary gold loans.
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SGBs’ interest will be subject to taxation in accordance with the Income Tax Act, 1961 (43 of 1961), as per recent reports. Individuals are exempted from paying capital gains tax on the redemption of SGB.
Long-term capital gains arising from the transfer of the SGB will now be eligible for indexation benefits, according to recent news.
SGBs shall be eligible for trading. The 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
- Stock Exchanges (NSE & BSE).
