Subscriptions for the 2020-21 Sovereign Gold Bonds (Series XII) will begin today (March 1). The deadline for submissions is March 5. The price of sovereign gold bonds has been set at Rs 4,662 per gram in the initial public offering. The government, in collaboration with the Reserve Bank of India, has agreed to give customers who apply online and pay through digital mode a discount of Rs 50 per gram off the issue price. The issue price of a Gold Bond for such buyers would be Rs 4,612 per gram of gold. SGBs are released in one-gram gold denominations and multiples thereof. The initial contribution in gold bonds is one gram, with a cumulative subscription limit of four kilograms for standard individuals, four kilograms for Hindu Undivided Family (HUF), and twenty kilograms for trusts and relevant agencies. SGBs can be purchased online via the country's largest lender, State Bank of India (SBI). Commercial banks, the Stock Holding Corporation of India Limited (SHCIL), RBI-designated post offices, and registered stock exchanges are all spots where investors can purchase gold bonds.
Steps to purchase SGB from SBI
In a recent tweet, SBI has stated that "Get returns and safety together! 6 golden reasons to invest in Sovereign Gold Bonds. SBI customers can directly invest in INB under e-services." In order to invest in SGB online through SBI, follow the steps listed below:
- Sign in to your SBI net banking account using the required credentials and click on 'eServices'
- Now navigate to the 'Sovereign Gold Bond' option and accept the 'terms and conditions'
- Now click on 'Proceed' and duly fill the registration form.
- Click on 'Submit' and in the subscription form, state the quantity of subscription and the name of the nominee.
- Now click on 'Submit' and you are done.
Lesser-known facts of Sovereign Gold Bonds
Below are some considerations that you must take into account before investing in SGBs:
- When it comes to investing in SGBs, unlike physical gold, there is no concern with storage, making them more stable. The Bond will have an 8-year term and an exit clause in the 5th, 6th, and 7th years, which can be practised on payout dates.
- The holders will be paid a fixed amount of 2.50 % per year on the nominal price, payable semi-annually.
- Unlike gold coins and bars, sovereign gold bonds are exempted from the goods and services tax (GST). When purchasing digital gold, you will have to pay 3% GST, much as when purchasing physical gold. SGBs even do not have any making costs.
- Bonds will be available for trading on stock exchanges within a fortnight of release on a date fixed by the RBI.
- SGBs may be used as a form of debt collateral. The loan-to-value (LTV) ratio will always be equal to the standard gold loan allowed by the Reserve Bank of India (RBI). The authorised banks are required to label the bond's possession in the depository.
- The government introduced the Sovereign Gold Bond Scheme in November 2015 as part of the Gold Monetisation Scheme. The RBI makes the issues available for subscription in tranches under the scheme.
- The redemption price is calculated using the India Bullion and Jewellers Association's basic estimate of gold 999 purity closing price over the previous three working days.
- The interest payable on gold bonds will be taxed according to the terms of the Income Tax Act of 1961. Capital gains tax on redemption to an investor, on the other hand, has been prohibited.