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Sovereign Gold Bonds are government securities denominated in grams of gold and act as a substitute for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. They are linked to the gold price and are thus expected to fetch the investors the same returns as that in case of physical gold. Sovereign Gold Bond 2017 -18 Series-IX will be live 20th November 2017 to 22nd November 2017.
The Sovereign Gold Bonds will be available both in Demat and paper form.
2.5% interest pa in addition to returns linked to Gold prices.
The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
They will carry sovereign guarantee both on the capital invested and the interest.
Bonds can be used as collateral for loans.
Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
Capital Gains Tax exemtion will be applicable on redemption.
Eligibility: The Bonds will be restricted for sale to Resident Indian entities including Individuals, HUFs, Trusts, Universities, and Charitable Institutions.
Denomination: The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
Tenor: The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
Minimum & Maximum size: Minimum permissible investment will be 1 units (i.e. 1 gram of gold) & maximum amount subscribed by an entity will not be more than 4000 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained. (Makes it a lucrative option for Religious Trusts)
Redemption price: The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
Interest rate: The investors will be compensated at a fixed rate of 2.5 % per annum payable semi-annually on the initial value of investment. (Avenue to additional returns)
Tax treatment: The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in the case of physical gold.
Tradability: Bonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI.
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