Sovereign Gold Bonds (SGB) first tranche for the current fiscal will be available for public subscription beginning Monday (June 20) and will close on Friday (June 24). The date of issuance will be June 28, 2022.
The second tranche will be available from August 22 – August 26, 2022. Here is a look at important information regarding the latest SGB tranche, according the the RBI.
Who can invest in SGB
The Gold Bonds issued under this Scheme can be invested by a Trust, HUFs, Charitable Institutions, Universities, or an individual resident in India, individual, or on behalf of a minor child, or jointly with any other persons.
Sovereign Gold Bond Scheme 2022-23 Series I details
The bond’s nominal value is based on the simple average closing price [announced by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity on the final three business days of the week preceding the subscription period, i.e. June 15, June 16, and June 17, 2022.
In consultation with the Reserve
, the Government of India has agreed to grant a discount of 50/- per gram less than the nominal value to those investors who apply online and pay for their application via digital channel. The issue price of a Gold Bond for such investors will be Rs 5,041/- (Rupees Five Thousand and Forty-One only) per unit.
The SGBs will be denominated in gram(s) of gold multiples, with one gram as the base unit.
What is the tenor of SBG
The SGB will have an eight-year tenor, with an option to redeem early after the fifth year on the date interest is due.
Minimum permissible investment will be One gram of gold.
Individuals may subscribe up to 4 kg, HUFs up to 4 kg, and trusts and similar companies up to 20 kg per fiscal year (April-March) as specified by the government from time to time. It will be obtained a self-declaration to this effect. SGBs subscribed under various tranches and those purchased through the Secondary Market during the fiscal year will be included in the annual ceiling.
In the case of a joint holding, the 4 KG investment restriction will only apply to the first application.
What is the issue price of SGB
The price of SGB shall be determined in Indian Rupees using a simple average of the last three working days of the week preceding the subscription period, as announced by the India Bullion and Jewellers Association Limited (IBJA). For investors that subscribe online and pay via digital method, the issue price of the SGBs will be reduced by Rs 50 per gram.
How to make SGB payment
The SGBs can be paid in cash (up to a limit of Rs 20,000), demand draft, cheque, or electronic banking.
SGB redemption price
The redemption price will be in Indian Rupees, based on a simple average of gold 999 pure closing prices provided by IBJA Ltd over the previous three working days.
Where to buy SGBs
The SGBs will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents
SGB interest rate
The investors will be paid a fixed rate of 2.50 percent per year on the nominal value, payable semi-annually.
SGB as collateral
The SGBs can be utilised as loan collateral. The loan-to-value (LTV) ratio must be set at the same level as the Reserve Bank’s regular gold loan.
Know-your-customer (KYC) requirements will be the same as for physical gold purchases. Voter ID, Aadhaar card/PAN or TAN/Passport, and other KYC documents would be required. The ‘PAN Number’ provided by the Income Tax Department to individuals and other entities must be attached to every application.
SGB tax treatment
Interest on SGBs is taxable under the provisions of the Income Tax Act of 1961. (43 of 1961). The tax on capital gains deriving from the redemption of SGB by an individual is free. Long-term capital gains deriving from the transfer of the SGB will be eligible for indexation advantages.
The SGBs shall be eligible for trading.