Sovereign Gold Bond Scheme 2020: Last Date, Eligibility, Interest
Sovereign Gold Bond 2020-21 – Government Announces Gold Bond Scheme: Resident entities like individuals, trusts, universities and charitable institutions are eligible to purchase gold bonds. The Government of India will be launching the Sovereign Gold Bonds Scheme soon. As investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold. They can be used as collateral for loans and can be sold or traded on stock exchanges.
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
Sovereign Gold Bond Scheme 2020
Here are 10 things you need to know about the gold bond scheme (Sovereign Gold Bonds 2020):
Please Note – Last date for buying Sovereign Gold Bond is 4th September 2020
For the last few years, the Narendra Modi government of the Center has been running a special scheme to reduce the demand for physical gold. Its name is Gold Bond Scheme. Under this scheme, the Narendra Modi government of the Center is selling gold once again.
Let me tell you here that the government sells gold in the form of bonds. The price of this gold is decided by the Reserve Bank. The Reserve Bank issues the price of this gold from time to time, which is cheaper and safer than the physical gold present in the market. Let us know about the new price of gold under this scheme.
The Reserve Bank has kept the price of gold bond at Rs 5,117 per gram this time. There will be a rebate of 50 rupees per gram on digital payment for the purchase of gold bonds. The bond price for such investors will be Rs 5,067 per gram.
The scheme will open on August 31 and close on September 4. This means that you can shop for gold during this period. At least one gram can be purchased. To buy it, you have to contact your bank, BSE, NSE website or post office.
It can be purchased digitally from here. This is a kind of secure investment because there is neither a concern for purity nor a problem of security.
1. Who issues gold bonds? The sovereign gold bonds are issued by the Reserve Bank of India on behalf of government.
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|
2. Where can one buy gold bond? Retail investors can buy gold bonds through banks, designated post offices, the Stock Holding Corporation of India, and stock exchanges NSE and BSE.
3. Who is eligible to buy SGB? Resident entities such as individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions are eligible to purchase gold bonds.
4. Minimum investment: The sovereign gold bond is denominated in multiples of one gram of gold, which is the minimum permissible investment limit.
5. Maximum investment: A subscriber is allowed a maximum limit of 4 kilograms in case of individuals and HUFs in a financial year. The upper limit of investment in case of trusts and similar entities per fiscal year is 20 kilograms. The annual ceiling includes bonds subscribed under different tranches in the initial issuance and those purchased from the secondary market, according to the release.
Gold bonds comes with a maturity period of eight years. The investor gets an opportunity to exit the bond in the fifth, sixth and seventh year on the interest payment dates, according to the statement.
7. Gold bond issue price: The price will be fixed on the basis of an average of closing gold prices (99.9 per cent purity) published by industry body IBJA (India Bullion and Jewellers Association) for the last three working days of the week preceding the subscription period. The issue price will be Rs. 50 per gram less for online subscribers making payment through a digital mode.
8. Interest rate: SGBs fetch interest at the rate of 2.5 per cent, payable semi-annually.
9. Income tax benefit: The interest on SGB investment is taxable under the Income Tax Act, 1961 (43 of 1961). However, any capital gains tax arising on redemption of the SGB to an individual has been exempted.
10. Documents required: The finance ministry said the KYC (know your customer) norms applicable to purchase physical gold will apply to gold bonds. “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 the investor(s),” the statement added.
Can I apply online?
Yes. A customer can apply online through the website of the listed scheduled commercial banks. Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 grams. The bonds can be bought by Indian residents or entities and is capped at 500 grams.
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.
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.