Govt Issues Sovereign Gold Bond Scheme 2020-2021 – All Details
Govt Issues Sovereign Gold Bond Scheme 2020-2021: Govt of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in six tranches from April 2020 to September 2020. Interest Rate Under Sovereign Gold Bond Scheme 2020.
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Govt Issues Sovereign Gold Bond Scheme 2020-2021
Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of ₹50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be ₹3,393/- (Rupees Three Thousand Three Hundred Ninety Three only) per gram of gold.
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.
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 2020-2021:
|Product name||Sovereign Gold Bond 2020-21|
|Issuance||To be issued by Reserve Bank India on behalf of the Government of India.|
|Eligibility||The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.|
|Denomination||The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.|
|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.|
|Minimum size||Minimum permissible investment will be 1 gram of gold.|
|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.|
|Joint holder||In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.|
|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.|
|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.|
|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.|
1. Eligibility for Investment:
The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, HUFs, Charitable Institution and University. “Person resident in India” is defined under clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
2. Form of Security
The Bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat form.
3. Date of Issue
The date of issuance shall be as per the details given in Para 7.
The Bonds shall be denominated in units of one gram of gold or multiples thereof. Minimum investment in the Bonds shall be one gram with a maximum limit of subscription per fiscal year of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time
- in case of joint holding, the above limits shall be applicable to the first applicant only;
- annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and
- the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
5. Issue Price
The nominal value of the Bonds shall be fixed in Indian Rupees fixed 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 than the nominal value to those investors applying online and the payment against the application is made through digital mode.
6. Period of subscription.-
The Subscription of the Gold Bonds under this Scheme shall be open as specified in Section 7 below.
Provided that the Central Government may, with prior notice, close the Scheme at any time before the period specified above
7. Calendar of Issuance
|Tranche||Date of Subscription||Date of Issuance|
|SGB 2020-21 Series I||April 20-24, 2020||April 28, 2020|
|SGB 2020-21 Series II||May 11-15, 2020||May 19, 2020|
|SGB 2020-21 Series III||June 8-12, 2020||June 16, 2020|
|SGB 2020-21 Series IV||July 6-10, 2020||July 14, 2020|
|SGB 2020-21 Series V||August 3-7, 2020||Aug 11, 2020|
|SGB 2020-21 Series VI||August 31- September 4, 2020||Sep 08, 2020|
The Bonds shall bear interest from the date of issue at the rate of 2.50 percent (fixed rate) per annum on the nominal value. Interest shall be paid in half-yearly rests and the last interest shall be payable along with principal on maturity.
10. Payment Options
Payment shall be accepted in Indian Rupees through cash up to a maximum of ₹ 20,000/- or Demand Drafts or Cheque or Electronic banking. Where payment is made through cheque or demand draft, the same shall be drawn in favour of the Receiving Office.
i) The Bonds shall be repayable on the expiration of eight years from the date of issue of the Bonds. Pre-mature redemption of the Bond is permitted after fifth year of the date of issue of the Bonds and such repayments shall be made on the next interest payment date.
ii) The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days, published by the India Bullion and Jewelers Association Limited.
RBI/depository shall inform the investor about the date of maturity of the Bond one month before its maturity.
13. Eligibility for Statutory Liquidity Ratio (SLR)
Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone shall be counted towards Statutory Liquidity Ratio.
14. Loan against Bonds
The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the Bonds shall be marked in the depository by the authorized banks. The loan against SGBs would be subject to decision of the lending bank/institution, and cannot be inferred as a matter of right by the SGB holder.
15. Tax Treatment
Interest on the Bonds shall be taxable as per the provisions of the 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.
Subscription for the Bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto, stating clearly the grams of gold and the full name and address of the applicant. Every application must be accompanied by the ‘PAN details’ issued by the Income Tax Department to the investor(s). The Receiving Office shall issue an acknowledgment receipt in Form ‘B’ to the applicant.
Nomination of and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007. An individual Non – resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:
- the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
- the interest and maturity proceeds of the investment shall not be repatriable.
The Bonds issued in the form of Stock Certificate shall be transferable by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.
19. Tradability of bonds
The Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.
20. Commission for mobilizing subscription
Commission for mobilizing subscription shall be paid at the rate of Rupee one per hundred of the total subscription received by the receiving offices on the applications received 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.
21. All other terms and conditions specified in the notification of Government of India in the Ministry of Finance (Department of Economic Affairs) vide number F. No.4(2) W&M/2018, dated 27th March 2018 shall apply to the Bonds.
22. Operational guidelines relating to Sovereign Gold Bonds are issued vide Click Here