Overview
Investment in gold has been one of the oldest and most traditional ways of saving your hard-earned money. However, buying gold brings with it the stress of storage and safety.
Sovereign Gold Bonds enable you to invest in gold and also eliminate the hassle of storage and security. Sovereign Gold Bonds (SGB) are government securities denominated in grams of gold. These are issued by the Reserve Bank of India (RBI) on behalf of the Government of India (GOI). Also, you can avail of a gold loan.
The discount of ₹ 50/- per gram on investing in SGB issue via IndusNet*
(The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode).
| Sr No | Item | Details |
|---|---|---|
| 1 | Denomination | The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. |
| 2 | Minimum/maximum investments | Min quantity – 1 unit ie 1 gram Max quantity –
|
| 3 | Tenure | The tenure of the Bond will be for 8 years with exit option from the 5th year to be exercised on the interest payment dates. |
| 4 | Interest rate | A fixed-rate of 2.5% per annum payable semi-annually on the initial value of the investment. |
| 5 | Payment option | Cash - below Rs 20,000 only Cheque IndusInd Account via Net Banking |
| 6 | Issuance form | Physical holding certificate or Demat (if DP details are provided on subscription). |
| 7 | Exit option | From the 5th year to be exercised on interest payment dates ie twice a year. |
| 8 | Issue price | The nominal value of Gold Bonds will be in INR fixed based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period. |
| 9 | Redemption price | On maturity, the Gold Bonds will be redeemed in INR and the redemption price will be based on a simple average of the closing price of gold of 999 purity for the last 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited (IBJA). The redemption amount will be credited to the bank account registered by you at the time of buying the bond. |
| 10 | Collateral | Bonds can be used as collateral for loans. Note: Granting a loan against SGBs would be subject to the decision of the bank/financing agency, and cannot be inferred as a matter of right. |
| 11 | KYC Documentation | Know-your-customer (KYC) norms will be the same as that for the purchase of physical gold. KYC documents such as voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by your PAN number. |
| 12 | Tax treatment | 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. |
| 13 | Tradability | The bonds are tradable from a date to be notified by the RBI. However, it may be noted that only bonds held in Demat form with depositories can be traded in stock exchanges. |
Advantages
Saves money
Helps you save money (5%-15%) upfront as there is no jeweller making charges or profit margins involved.
Long-term investment
One of the best forms available for saving up for your daughter’s wedding jewellery or gifting on special occasions.
Online discount
Avail a discount of Rs 50 per gram on investing in Sovereign Gold Bonds through our net banking platform.
More earnings
Earn 2.5% per annum payable semi-annually on a nominal value of the investment. Also, no TDS and Capital Gains Tax applicable to redemption.
Safe and secure
Eliminate risks and cost associated with storage of physical gold. This is the safest way to buy gold without worrying about security.
Sovereign Gold Bond Scheme Eligibility Criteria
Any Indian resident individual or minor (by their guardian), HUF, trusts, universities and charitable institutions.
Sovereign Gold Bond FAQs
What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. The Bond is issued by Reserve Bank on behalf of Government of India.
Why should I buy SGB rather than physical gold? What are the benefits?
The quantity of gold for which you pays is protected, since you receive the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. You are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
Who is eligible to invest in the SGBs?
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.
What is the minimum and maximum limit for investment?
The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
What is the rate of interest and how will the interest be paid?
The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to your bank account as mentioned during subscription and the last interest will be payable on maturity along with the principal.
For any queries/ grievance please write to us at reachus@indusind.com