Government announces sale of Sovereign Gold Bond

The government has approved the issue of Sovereign Gold Bonds 2019-20 (Series III) at Rs 3,499 per gram of gold.

Sovereign Gold Bonds

• Sovereign Gold Bonds are government securities denominated in grams of gold. They were introduced as substitutes for holding physical gold.
• The bonds will be restricted for sale to resident individuals, HUFs, trusts, universities and charitable Institutions.
• The bonds denominated in multiples of a gram of gold have a basic unit of 1 gram.
• The tenor of the bond is fixed for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.
• The minimum permissible investment will be 1 gram of gold.
• The investor receives the ongoing market price at the time of redemption/ premature redemption.
• The bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum and the interest will be credited semi-annually
• The maximum limit of subscription will be 4 kg for individual, 4 Kg for HUF and 20 kg for trusts.
• Interest on the bonds will be taxable as per the provisions of the Income-tax Act, 1961 and are exempt from the capital gains tax.
• TDS is not applicable on the bond and the investor is responsible to comply with the tax laws.
• The bonds are tradable in stock exchanges if held in Demat form.
• The Sovereign gold bonds also aid in maintaining the current account deficit as most of the demand for gold in India is met through imports.

Sovereign gold bonds are sold by scheduled commercial banks with an exception of small finance banks and payment banks, Stock Holding Corporation of India Limited, designated post offices and recognised stock exchanges like National Stock Exchange and BSE.