The Government of India, in consultation with the Reserve Bank of India, has decided to issue third tranche of Sovereign Gold Bonds.
Applications for the bond will be accepted from March 8, 2016 to March 14, 2016. The Bonds will be issued on March 29, 2016.
The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL) and designated post offices.
The borrowing through issuance of the Bond will form part of market borrowing programme of the Government of India.
Finance Minister had announced in Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold. Accordingly, two tranches of issuances have been undertaken during 2015-16 so far.
Highlights of the gold bond scheme
- Sovereign Gold Bonds are issued by RBI on behalf of the Government of India on payment of the required amount in rupees and are denominated in grams of gold.
- The Bonds are restricted for sale to resident Indian entities including individuals, HUFs, trusts, Universities, charitable institutions. Minimum permissible investment is 2 grams of gold to be paid in rupees.
- The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March).
- Government has fixed the rate of interest for the year 2015-16 as 2.75 % per annum , payable on a half yearly basis.
- The bonds are available in both in demat and paper form. The rate for the Bonds is fixed on the basis of simple average of closing price for gold of 999 purity of the previous week published by the India Bullion and Jewellers Association (IBJA).
- These bonds will be available at Banks , Post Offices and SHCIL.
- The tenor of the Bond is for a period of 8 years with exit option from 5th year onwards to be exercised on the interest payment dates. KYC norms are same as that for gold.
- Exemption from capital gains tax is also available.
- Long term capital gains arising to any person on transfer of SGB is also eligible for indexation benefits.