The government will open the next tranche of sovereign gold bonds (SGBs) for subscription from November 5 that coincides the auspicious occasion of Dhanteras. As per the Finance Ministry's statement, "The issue price of the bond during this subscription period i.e. November 5-9, 2018, shall be Rs 3,183 per gram with settlement on November 13, 2018, as also published by RBI in the Press Release dated October 12, 2018".
For those applying for SGBs online and making payment via digital route, a discount of Rs. 50 per gm is being offered. So, for such online investors, 1 gm of SGB can be secured at a price of Rs. 3,133 per gram.
The scheme introduced in the year 2015 aimed at reducing the demand for physical gold and also channelize a part of household savings into financial investment options.
Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment is one gram with a maximum subscription limit of 500 grams per individual in a fiscal year.
The maximum subscription limit is 4 kg for individuals and HUF and 20 kg in case of trusts and similar entities per fiscal (April-March). The tenor of the bond will be for a period of eight years with exit option in the fifth, sixth and seventh year.
The bonds will be sold by banks, designated post office branches, NSE, BSE and the Stock Holding Corporation of India Limited (SHCIL).
The payment for the SGBs will be via cash for a maximum of Rs. 20,000 or net banking or cheque or DD. The holding certificate for the same will be issued to the investors. The bonds can be converted into dematerialized form and also be kept as collateral for availing loans. The loan to value (LTV) ratio is to be set at par with regular gold loan mandated by the RBI from time to time.
The interest on gold bonds will be taxable as per the provision of Income Tax Act, 1961 (43 of 1961).
Know-your-customer (KYC) norms will remain the same as that required in case of buying physical gold, RBI said further. "KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the PAN Number' issued by the Income Tax Department to the investor."