New tranche of Sovereign Gold Bond scheme's would start from 12-Oct-2020 at rate of ₹5,051/gm with discount of ₹50/gm for online investors.
The government has fixed the rate at ₹ 5,051 for a gram of gold for offline subscribers. Discount of ₹ 50 per gram will be available for online subscribers. The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period.
The bonds will be issued on October 20, 2020. The bonds would be sold through banks, Stock Holding Corporation of India Limited, designated post offices, and stock exchanges - National Stock Exchange and BSE.
The scheme offers benefits similar to the earlier tranche of 2.5% interest and exemption on capital gains tax on redemption. The government launched the sovereign gold bond scheme in November 2015 to channelize a part of domestic savings, used for purchasing physical gold, to financial savings and thus lower the demand for the precious yellow-metal.
Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment in the bonds is one gram with a maximum limit of subscription of 500 grams per person per fiscal year.
Disclaimer: Plesae read the documents carefully. These details are for your information purpose and are not intend or asking to invest. Reuesting you to make own decision before investing.
Yearly tranches and units outstanding of Sovereign Gold Bonds
Source:
Reserve Bank of India, UdhyamPitch Research
Issuer
The Bond is issued by Reserve Bank on behalf of Government of India..
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Key Benefits of SGB
1 |
Interest Rate benefit Bonds bear 2.5% interest rate per annum on the initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal. Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). |
|---|---|
2 |
Capital Gains Tax benefit No Capital gain tax if bonds held till maturity (Applicable after 3 years). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond. |
3 |
Avoid Risk and Storage Cost SGB's helps to save on cost spent to store physical Gold. The risks and costs of storage are eliminated. |
4 |
Quality Check not required Quality check is must while buying physical gold while it is not required to buy SGB. |
5 |
Discount of Rs50/gm for Online Subscription Online customers will have additional advantage to avail discount. Discount of ₹50/- per gram to investors applying online and payment made through digital mode. |
Comparison Metrics
Below metrics provide comparison of SGB with Physical and Gold ETF
| Particulars | Sovereign Gold Bond | Physical Gold | Gold ETF |
|---|---|---|---|
| Returns | Higher than actual return on gold | Lower than actual return on gold | Lower than actual return on gold |
| Sovereign guarantee | Yes | Not Applicable | No |
| Safety | High | Risk of handling physical gold | High |
| Purity of Gold | High as it is in Electronic Form | Purity of Gold always remains a question | High as it is in Electronic Form |
| Redemption/Exit Route | After 5 years | Anytime | Anytime |
| Liquidity | Limited | Highly Liquid | Highly Liquid |
| Storage Cost | Very Low | High | Very Low |
| Brokerage/Charges | No | No | Yes |
| Quality Check | No | Yes, Quality Check is Must | No |
| Interest Payment | Yes, @ 2.5% p.a. | No | No |
| Long Term Capital Gains (LTCG) | Applicable after 3 years. (No Capital gain tax if held till maturity ) | Applicable after 3 years | Applicable after 3 years |
Details of Issue
Details of Sovereign Gold Bond Scheme
| Particulars | Details |
|---|---|
| Opening Date | 12-Oct-2020 |
| Closing Date | 16-Oct-2020 |
| Discount | ₹ 50 for online payment mode |
| Face Value (Online) | ₹ 5,001/ gm |
| Face Value (Offline) | ₹ 5,051/ gm |
| Bid Lot | 1gm and multiples thereof upto 4,000gm |
| Minimum Bid Amount | ₹ 5,051 - ₹ TBA/- |
| Interest Payment | 2.50%/annum payable semi-annually on the nominal value. |
| Tenor | 8 Years |
| Premature Redemption | Early exit option after 5 years, to be exercised on interest payment dates only |
| Listing on | Stock Exchange |
| Mode of Payment | Cash payment (upto ₹ 20,000) or demand draft or cheque or electronic banking |
Above details may change. Typo error could possible. Please contact us to update details
Tentative Dates
Below are the indicative dates for the IPO
| Opening Date | 12-Oct-2020 |
| Closing Date | 16-Oct-2020 |
| Date of Issue | 20-Oct-2020 |
| Premature Redemption | 20-Apr-2026 (Tentative) |
| Date of Redemption | 20-Oct-2028 (Tentative) |
| Listing on Stock Exchange/s | around 15 days |
Above dates are tentative and may change upon unforeseen circumstances
Application Forms
| The application form will be provided by the following |
|---|
| Banks |
| Stock Holding Corporation of India Ltd. (SHCIL) |
| Designated Post Offices |
| Agents |
Above details are indicative and may change
Frequently Asked Questions (FAQ):
How to Buy Sovereign Gold Bonds?
Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
What are Payment options?
Payment for the Bonds will be through cash payment (upto a maximum of ₹ 20,000) or demand draft or cheque or electronic banking.
What is minimum and maximum quantity one can buy?
One can buy minimum 1gm and in multiples thereoff. Maximum limit of subscription for individuals is 4,000gms.
What are the Know-Your-Customer (KYC) norms?
Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s).
Are these bonds tradable?
Yes, Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
Can I get the bonds in demat form?
Yes. The bonds can be held in demat account. A specific request for the same must be made in the application form itself. Till the process of dematerialization is completed, the bonds will be held in RBI’s books. The facility for conversion to demat will also be available subsequent to allotment of the bond.
How issue price is arrived?
Nominal value is declared by RBI based on the average closing price of 999 purity gold for the last three business days preceding to the issue as published by the Indian Bullion and Jewellers Association Limited.
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