Akshaya Tritiya is coming on 29th of April 2017 and the Indian sentiments have initiated the Government to go for the first issue of Gold Bonds, from April 24 to April 28 this year.  The features of the bonds to be issued are:

Issue open for Public Subscription April 24 and April 28 -2017
Issue price of Gold Bonds Rs. 50 per gram
Date of issue of bonds MAY 12, 2017

However, what are the factors to be studied before investing in these bonds?

a) Price

The prices quoted for these bonds are based on Simple Average of closing price of gold of 999 purity which is published by Indian Bullion and Jewellers Association for the week (Monday to Friday), which precedes the subscription period.  The price of Rs. 50 which is the issue price is less than the nominal value.

b) Interest

The second factor here is that these bonds would earn interest @ 2.50 per cent per annum, which will be paid every six months, on the investment amount.

c) Period

The bonds carry a tenor of 8 years and the purchaser has the option to exit from fifth year, which should be exercised on the interest payment dates.

d) Place of purchase

Bonds can be purchased from Post Offices, Banks, Stock Holding Corporation of India (SHCIL) and recognised stock exchanges- National Stock Exchange (NSE) and BSE.

e) Minimum investment

Minimum of 1 gm of gold and the maximum amount by one person cannot exceed 500 grams per financial year.

f) Options for Payment

Payments can be made through cash upto a maximum of Rs. 20,000 or Demand Draft or Cheque or Electronic Modes.

g)Account Status:

Accounts can be held individually or jointly.  In case of joint accounts, the maximum ceiling of 500 grams will be made applicable only to the first applicant.

h)Who is eligible?

Resident Indians viz Individuals, HUFs, Trusts, Universities and Charitable Institutions.

i) Loan facility

Bonds can be used as collateral for loans.  The LTV (Loan to Value) ratio will be as applicable to a normal Gold loan governed by RBI guidelines.

j) Tax Treatment

The Bonds will be subjected to Income Tax Act 1961 (43 of 1961).  The Sovereign Gold Bonds, on redemption, shall be exempted from Capital Gains Tax.  On Transfer, the long term capital gains that would arise will be eligible for Indexation benefits.

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