Sovereign Gold Bonds will be issued by the Central Government in six tranches from October 2020 to March 2021, according to RBI.
Subscription for Series VII is between October 12 – 16 and date of issuing bonds will be October 20. Subscription for Series VIII is between November 09 – 13 and date of issuing bonds is November 18. Subscription for Series IX will begin on December 28 and end on January 01, 2021. Issuance of bonds is on January 05. Subscription for Series X is on January 11 and 15 and the issuance date is January 19. Subscription for Series XI is on February 01- 05 and issuance of bonds is on February 9. Subscription for Series XII is on March 1- 5 and issuance is on March 9.
The bonds will be restricted for sale to resident individuals, HUFs, trusts, universities and charitable institutions. They will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
The tenure of the bond will be for a period of 8 years with exit option after the fifth year to be exercised on the next interest payment dates. The minimum permissible investment will be 1 gram of gold.
The maximum limit of subscription shall be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March) notified by the government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by government and those purchased from the secondary market.
In case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.
Issue price of a bond will be fixed in Indian Rupees on the basis of simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association, for last three working days of the week preceding the subscription period. The issue price of the gold bonds will be Rs.50 per gram less for those who subscribe online and pay through digital mode.
Payment for the bonds will be through cash payment (up to a maximum of Rs.20,000) or demand draft or cheque or electronic banking.
The gold bonds will be issued as Government of India Stock under the GS Act, 2006. The investors will be issued a Holding Certificate for the same. The bonds are eligible for conversion into demat form.
The redemption price will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity, of previous three working days published by IBJA.
Bonds will be sold through commercial banks, Stock Holding Corporation of India, designated post offices (as may be notified) and recognised stock exchanges — National Stock Exchange of India and Bombay Stock Exchange, either directly or through agents.
The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value. Bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
The interest on gold bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.