The Reserve Bank of India, on behalf of Government of India, has decided to issue fourth tranche of Sovereign Gold Bonds. Its salient features are as under:
- Applications for the bond will be accepted from July 18, 2016 to July 22, 2016.
- The Bonds will be issued on August 5, 2016.
- The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange.
- These bonds are issued inline with the announouncement in Union Budget 2015-16 on developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold.
- So far, three tranches of issuances have been undertaken during 2015.
- The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
- The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram
- Maximum limit The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March).
- Joint holder In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
- Issue price is determined to be Rs. 3119 per gram.
- Payment option Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking
- The investors will be issued a Holding Certificate. The Bonds are eligible for conversion into demat form.
- The investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment.
- Bonds can be used as collateral for loans.
- LTV to be set equal to ordinary gold loan mandated by RBI from time to time.
- The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted.
- Bonds will be tradeable on stock exchanges/NDS-OM from a date to be notified by RBI and the Bonds will be eligible for Statutory Liquidity Ratio purposes