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  1. Sovereign Gold Bonds-Series 4 to open for subscription from Monday: Here’s all you need to know about the scheme

Sovereign Gold Bonds-Series 4 to open for subscription from Monday: Here’s all you need to know about the scheme

The Government of India has come out with the fourth series of Sovereign Gold Bonds 2016-17, which will open for subscription from February 27, 2017 to March 03, 2017.

By: | Updated: February 24, 2017 6:18 PM
The bonds under this scheme may be held by a person resident in India, in his capacity as such individual, or on behalf of a minor child, or jointly with any other individual.

The Government of India has come out with the fourth series of Sovereign Gold Bonds 2016-17, which will open for subscription from February 27, 2017 to March 03, 2017.

The bonds will be denominated in units of one gram of gold and multiples thereof and be available in both the demat and paper form. Minimum investment in the bonds shall be one gram with a maximum limit of subscription of five hundred grams per person per fiscal year.

Here is all you need to know about the Sovereign Gold Bond Scheme 2016-17, Series IV:

1. Eligibility for Investment:
The bonds under this scheme may be held by a person resident in India, in his capacity as such individual, or on behalf of a minor child, or jointly with any other individual. The bond may also be held by a trust, charitable institution, and university.

2. Form of Security
The bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate (Form C). The bonds shall be eligible for conversion into a demat form.

3. Date of Issue
Date of issuance shall be March 17, 2017.

4. Denomination
The bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the bonds shall be one gram with a maximum limit of subscription of five hundred grams per person per fiscal year (April – March).

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5. Issue Price
Price of the bonds shall be fixed in Indian rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period. The issue price shall be Rs 50 per gram less than the nominal value.

6. Interest
The bonds shall bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.

7. Receiving Offices
Scheduled Commercial Banks (excluding RRBs), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd. are authorized to receive applications for the bonds either directly or through agents.

8. Payment Options
Payment shall be accepted in Indian rupees through cash up to a maximum of Rs 20,000 or demand drafts or cheque or electronic banking. Where payment is made through a cheque or demand draft, the same shall be drawn in favour of the receiving office.

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9. Redemption
i) The bonds shall be repayable on the expiration of eight years from March 17, 2017, the date of issue of gold bonds. Pre-mature redemption of the bond is permitted from fifth year of the date of issue on the interest payment dates.
ii) The redemption price shall be fixed in Indian rupees on the basis of the previous week’s (Monday – Friday) simple average closing price for gold of 999 purity, published by IBJA.
iii) The receiving office shall inform the investor of the date of maturity of the gold bond one month before its maturity.

10. Repayment
The receiving office shall inform the investor of the date of maturity of the bond one month before its maturity.

11. Eligibility for Statutory Liquidity Ratio (SLR)
Investment in the bonds shall be eligible for SLR.

12. Loan against bonds
The bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time. The lien on the bonds shall be marked in the depository by the authorized banks.

13. Tax Treatment
Interest on the bonds shall be taxable as per the provisions of the Income-Tax Act, 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

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14. Applications
Subscription for the bonds may be made in the prescribed application form (Form ‘A’) or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt in Form ‘B’ to the applicant.

15. Transferability
The bonds shall be transferable by execution of an instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.

16. Tradability of bonds
The bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

17. Commission for distribution
Commission for distribution shall be paid at the rate of rupee one per hundred of the total subscription received by the receiving offices on the applications received and receiving offices shall share at least 50% of the commission so received with the agents or sub-agents for the business procured through them.

18. Joint holding and nomination
Multiple joint holders and nominees (of the first holder) are permitted. Necessary details may be obtained from the applicants as per practice.

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19. KYC requirements
Know-Your-Customer (KYC) norms shall be the same as that for the purchase of physical form of gold. Identification documents such as passport, Permanent Account Number (PAN) Card, Voter’s Identity Card, Aadhaar card shall be required. In case of minors only, the bank account number may also be considered as valid for KYC verification. KYC will be done by the issuing banks, SHCIL offices, post offices or agents.

(Source: RBI)

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