Gold bond scheme opens for subscription: 10 things to know
The sovereign gold bond scheme, which was launched in 2015, is basically government securities denominated in grams of gold. The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
2) The minimum investment in sovereign gold bond scheme is 1 gram of gold and the maximum limit for individuals is 4 kg.
3) Sovereign gold bonds come with a maturity period of 8 years, with an exit option from the fifth year. Sovereign gold bonds are also traded on stock exchanges within a fortnight of issuance, offering an early exit option for investors.
4) The redemption price will be linked to the prevailing price of gold. The bond is issued by the RBI on behalf of the government.
5) The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and stock exchanges – BSE and NSE.
6) Gold bonds pay interest at the rate of 2.50% per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor
7) The interest on gold bonds is taxable according to provisions of the Income Tax Act but TDS is not applicable.
Capital gains tax arising from redemption of sovereign gold bonds has been exempted. Also, indexation benefit is provided to LTCG arising to any person on transfer of bonds.
9) Sovereign gold bonds can also be used as collateral for loans.
10) Experts say that sovereign gold bonds are a better alternative to holding gold in physical form, with risks and costs of storage eliminated. Investors are also assured of the market value of gold at the time of maturity and periodic interest payment on their investments.
The sovereign gold bond scheme, which was launched in 2015, is basically government securities denominated in grams of gold. The bonds are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
2) The minimum investment in sovereign gold bond scheme is 1 gram of gold and the maximum limit for individuals is 4 kg.
3) Sovereign gold bonds come with a maturity period of 8 years, with an exit option from the fifth year. Sovereign gold bonds are also traded on stock exchanges within a fortnight of issuance, offering an early exit option for investors.
4) The redemption price will be linked to the prevailing price of gold. The bond is issued by the RBI on behalf of the government.
5) The bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and stock exchanges – BSE and NSE.
6) Gold bonds pay interest at the rate of 2.50% per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor
7) The interest on gold bonds is taxable according to provisions of the Income Tax Act but TDS is not applicable.
Capital gains tax arising from redemption of sovereign gold bonds has been exempted. Also, indexation benefit is provided to LTCG arising to any person on transfer of bonds.9) Sovereign gold bonds can also be used as collateral for loans.
10) Experts say that sovereign gold bonds are a better alternative to holding gold in physical form, with risks and costs of storage eliminated. Investors are also assured of the market value of gold at the time of maturity and periodic interest payment on their investments.
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