The Reserve Bank of India (RBI) has fixed the issue price for SGB at Rs 5,051 per gram of gold, which will be issued at an interest rate of 2.5 per cent for a tenor of 8 years.
The seventh tranche of the Sovereign Gold Bond (SGB) Scheme 2020-21 opened for subscription today. While the subscription date for the series is from October 12 to 16, the issue date is set on October 20.
The Reserve Bank of India (RBI) has fixed the issue price for SGB at Rs 5,051 per gram of gold, which will be issued at an interest rate of 2.5 per cent for a tenor of 8 years. Experts say this enables investors to buy sovereign gold bonds at a comparatively less price. In the 2020-21 fiscal year, SGBs will be issued in 5 more tranches.
For investors applying online, the issue price of the gold bond will be Rs 5,001 per gram of gold. The government will allow a discount of 50 per gram less than the nominal value to those investors applying online. Investors need to make payments against the application through digital mode.
Earlier the bonds (Series VI), which were open for subscription from August 31 to September 4, were issued for Rs 5,117 per gram of gold. The next Sovereign Gold Bond Scheme (SGB) 2020-21 Series VIII will open for subscription from November 9 to November 13.
Note that, the bonds come with a tenure of 8 years and with the exit option after 5th year on the interest payment dates. Additionally, the bonds are restricted for sale to resident individuals, trusts, universities, Hindu Undivided Families (HUFs), and charitable institutions.
If you are looking to buy Sovereign Gold Bonds, it can be purchased at scheduled commercial banks, Stock Holding Corporation of India (SHCIL), designated post offices, along with stock exchanges such as the NSE and the BSE. However, it cannot be bought from small finance banks and payment banks. It can also be purchased online through the bank websites, applicants applying digitally get a discount of Rs 50 per gram.
You can apply for a minimum of 1 gram gold, and an individual can invest up to 4 kgs in SGBs in each financial year. Other eligible entities such as trusts, universities, and charitable institutions can invest up to 20 kg in a year. Also, even though an NRI cannot invest in these bonds but they are allowed to hold these bonds received as a nominee of a resident investor.
If you hold these bonds till maturity, there will be no capital gain tax on the investment. Also, investors get an interest of 2.5 per cent annually, paid on a semi-annual basis. Additionally, unlike in physical gold, GST is not levied on sovereign gold bonds.