The 12th Tranche of Sovereign Gold Bond 2020-21 will open for subscription from Monday and will continue until March 5th. Launched in 2015, Sovereign Gold Bond is a gram-denominated government securities of gold. It is often touted as a better alternative to holding gold in physical form. Gold bonds are issued by the Reserve Bank of India on behalf of the Government of India.Issue price has been revised to ￡4,662 per gram.
Important Things You Should Know Before Investing in a Sovereign Gold Bond
Who can buy it?
The gold bond scheme was first introduced to change the view of buying gold for financial investment. Residents, Hindu non-divided families (HUFs), trusts, universities and charities are eligible to apply for a bond subscription.
Reserve Bank of India on behalf of Government of India ￡4,662 per gram. The issue price of gold bonds is derived from the simple average of the closing prices of 999 gold issued by India Bullion and Jewellers Association Limited for the last 3 business days of the week prior to the subscription period.
Where to buy:
Investors can purchase gold bonds directly or through agents from commercial banks, the Reserve Bank of India (SHCIL), RBI-designated post offices, and authorized stock exchanges.
The interest rate on bonds is fixed at 2.50% per annum. Interest is credited to the investor’s bank account semi-annually and the final interest is paid at maturity along with the principal. According to the Income Tax Act of 1961 (43 of 1961), interest is taxable. There is no capital gains tax on redemption of sovereign gold coins.
The term of the bond is 8 years. According to the RBI, both interest and redemption will be credited to the bank account provided by the customer when the bond was purchased. The bank allows early cashing or redemption of the bond five years after the issue date of the coupon payment date.
Minimum and maximum investment:
Bonds are issued in 1 gram of gold and multiples thereof. The minimum investment in gold bonds is 1 gram, the subscription limit is 4 kg for individuals, 4 kg for Hindu non-divided families (HUF), and 20 kg for trusts and similar entities. In the case of co-ownership, the restrictions apply to the first applicant, the central bank said.
Customers can apply online from the upcoming commercial bank websites listed.The issue price of gold bonds is ￡50 less per gram than the face value of investors applying online, payments for applications are made in digital mode.
The bank said that if the customer meets the eligibility criteria, creates a valid ID and sends the application within the deadline, the customer will receive the quota.
If held in demat format, the bond will be available for trading on the exchange. Specific requests for the same must be made in the application itself. It can also be transferred to other qualified investors.
These securities can also be used as collateral for loans from banks, financial institutions and non-bank financial institutions (NBFC).
Should you invest?
“If you are considering investing in gold, SGB is a much better option than physical gold. SGB issuance and redemption prices are associated with prevailing gold prices. Invest in these bonds It comes with an annual yield of 2.5% of the amount. On the other hand, gold jewelery does not provide annual interest and incurs manufacturing and disposal fees, “said ClearTax founder and chief executive officer. Archit Gupta says.
“In addition, capital gains from the sale of physical gold are taxable, but if held to maturity, SGB capital gains are not taxed. You can sell SGB in the secondary market, In that case, the realized capital gains are taxable. “He explained.
Sovereign Gold Bond will open for subscription tomorrow.Benefits Maturity Period — 10 Things You Should Know
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