Sovereign Gold Bond Scheme 2021-2022, Series 6, will be open for subscription for five days from today till September 30, 2021. The issue price for the tranche of this gold bond scheme is fixed at Rs 4,732 per gram of gold. Those who are applying for subscribing this gold bond scheme via online modes will get a discount of Rs 50 per gram less than the nominal value as decided by the government in consultation with the apex bank. For those who are applying through online modes, the issue price would be Rs 4,682 per gram of gold.
So buying this bond will fetch you an interest rate of 2.5 per cent that is over and above the valuation of the gold at the time of maturity, So, this scheme is good one for all those who buy gold for investment purposes.
This Sovereign Gold Bond Scheme, was launched in November 2015. The sole objective behind launching this scheme was to reduce the demand for physical gold. The price of gold bond is determined on the basis of simple average of closing price of gold of 999 purity, published by the Indian Bullion and Jewellers Association Limited for the last three working days of the week preceding the subscription period.
In the past, the government issued the Sovereign Gold Bond (SGB) in six tranches from May 2021 to September 2021.
Here is all you need to know about the scheme:
Who all can invest in these Bonds?
Any resident of India, Hindu undivided families, trusts, universities and charitable institutions are eligible to invest in the sovereign gold bond scheme. A minor is also eligible to invest in the Sovereign gold bond scheme provided the application is put up by the guardian on his behalf.
What is the duration of these bonds?
The duration of the bond is for a period of 8 years. However, you can exit from the scheme only after 5th year to be exercised on the next interest payment dates. The minimum permissible investment is 1 gram of gold. The maximum limit of subscription is 4 kg for individuals, 4 kg for HUFs and 20 kg for trusts and similar entities per fiscal (April-March).
Is there any tax benefit?
As we know the interest received on your gold bond holdings is taxable. But in the case of Sovereign gold bonds no capital gains tax is applicable if held till maturity. Or in other words, any capital gains arising at the time of redemption is tax-free. This is an exclusive income tax benefit offered on gold bonds.
Is there any Risk Involved?
Not much, this investing avenue is pretty much safe. You may bear capital loss as and when the gold prices goes down. Otherwise, the investor does not lose in terms of unit of gold which he has paid for.
Can I apply online?
Yes, even applying via online modes is being incentivised by the government. And if you will subscribe to this scheme via online modes you will get a discount of Rs 50 per gram less than the nominal value in comparison to those who will be applying offline.
How can You Pay for investing in SGBs?
If you are done with the KYC and filled the online form, then you can pay the amount via cheque, demand draft or electronic fund transfers like IMPS, NEFT, RTGS etc.
Can you go for encashment and premature redemption?
Encashment option is available only after the 5th year of scheme. If you want to exit the scheme then you will have to get in touch with the bank. Another incentive of buying this bond is its transferability.
Can you use this bonds as collateral?
Apart from less risk, sense of safety, one another big benefit of subscribing to these gold bond scheme is that in any unforeseen circumstances, when you are in desperate need of money then you can use this bonds as collaterals for getting loan from banks, NBFCs and other financial institutions.
If the bondholder dies what will happen next?
If the bondholder dies before maturity then the nominee in the scheme may reach out to receiving office with claim. It may be noted that the above provisions are applicable in the case of a deceased minor investor also. After getting in touch with the receiving official and verification, the title of the bond will pass to the person fulfilling the criteria not necessarily to the natural guardian.
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