Govt Issues Sovereign Gold Bond Scheme 2017-2018 – All Details

Govt Issues Sovereign Gold Bond Scheme 2017-2018, Check Sovereign gold scheme Complete Details. Interest Rate Under Sovereign Gold Bond Scheme 2018. Here we are providing Complete details for Sovereign Gold Bond Scheme. In this article you can find everything you want to know about Sovereign Gold Bond Scheme like – What is Sovereign Gold Bonds, Features of Sovereign Gold Bond Scheme, Rate of return in the form of interest, Eligibility for Sovereign Gold Bond Scheme, Determination of price, Tax treatment etc. Recently we provide Complete details for Dormant Company. Now you can scroll down below and check complete details regarding “Govt Issues Sovereign Gold Bond Scheme 2017-2018 – All Details

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Sovereign Gold Bond Scheme

Govt Issues Sovereign Gold Bond Scheme 2017-2018

Government of India decide to issue Sovereign Gold Bond Scheme 2017-2018 Series 3rd. Applications for the bond to be accepted from October 24, 2016 to November 02, 2016 and the Bonds will be issued on November 17, 2016. 

What is Sovereign Gold Bonds :

These are bonds issued on payment of money and are linked to price of gold which earns you additional income.

One of the main objectives of this scheme is that government is targeting those who are investing in gold by purchasing gold coins or bars and not those who are buying jewellery for consumption. They carry a specified interest rate which is to be finalized by government of India yet..! But as per the source of information available the interest may be not more than 2.50% pa. But the attractive side of this scheme is its maturity value, i.e gain at the time of sale in the form of appreciation of its price.

Objectives :

Main objectives of the government behind introduction of this scheme :

(1) The main idea is to reduce the demand for physical gold.

(2) Shift part of the estimated 300 tons of physical bars and coins purchased every year for Investment into ‘demat’ gold bonds.

Features of Sovereign Gold Bond Scheme 2017-2018:

Sl. No.ItemDetails
1Product nameSovereign Gold Bond 2017-18 – Series I
2IssuanceTo be issued by Reserve Bank India on behalf of the Government of India.
3EligibilityThe Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4DenominationThe Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5TenorThe tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
6Minimum sizeMinimum permissible investment will be 1 gram of gold.
7Maximum limitThe maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
8Joint holderIn case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
9Issue pricePrice 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 week (Monday to Friday) preceding the subscription period. The issue price of the Gold Bonds will be Rs. 50 per gram less than the nominal value.
10Payment optionPayment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
11Issuance formThe Gold Bonds will be issued as Government of India Stocks under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12Redemption priceThe redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
13Sales channelBonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14Interest rateThe investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
15CollateralBonds 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.
16KYC DocumentationKnow-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.
17Tax treatmentThe 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
18TradabilityBonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
19SLR eligibilityThe Bonds will be eligible for Statutory Liquidity Ratio purposes.
20CommissionCommission for distribution of the bond shall be paid at the rate of 1% of the total subscription received  by  the  receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.