Narendra Modi government’s fourth tranche of sovereign gold bond scheme (SGB) opened for subscription on Monday, applications for which will be accepted till July 22, 2016.
A finance ministry notification said that the bonds will be available through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and stock exchanges – NSE and BSE.
Gold bond scheme opens; who can buy and what is the purchase limit
Gold Bond Scheme 4th tranche opens today amid bull-run in yellow metal, should you invest?
The scheme was launched by the government last year to curb the physical gold demand and this is the first gold bond scheme in the financial year 2016-17. Experts feel as the gold prices are rising, these bonds could be a good buy as the outlook for the yellow metal remains good.
“Sovereign Gold Bond (SGB) is an attractive product in many ways. It not only provides the advantage of capital gains but also gives investors an interest of 2.75% annually on the amount invested. There’s no income tax on the redemption of gold bonds on expiry. It is eligible for long term capital gains tax at 20% after three years, with indexation benefit. Another advantage is that it can be held in paper or demat form, which further reduces the risks in storing physical gold. The one downside – if you could call it that – is that there’s an investment ceiling of 500 grams in a financial year,” Adhil Shetty, CEO, BankBazaar.com said.
Below are the key features of the scheme
- The issuance price for each gram of gold has been fixed at Rs 3,119
- SGB’s minimum subscription has now been reduced to one gram and maximum investment of 500 gm
- The gold bonds will fetch an interest of 2.75 per cent per annum, which is payable every 6 months on initial investment
- On redemption, capital gains are tax exempted
- The bonds could be used as collateral for loans