What is Sovereign Gold Bond Scheme (SGB)?
Sovereign Gold Bond Scheme (SGB) was launched by Government of India in 2015. Every year country imports tons of gold to offset the domestic demand which results current account deficit. This helps maintaining the country’s Current Account Deficit within sustainable limits. Let’s elaborately discuss What is Sovereign Gold Bond Scheme.
What is Sovereign Gold Bond Scheme?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
Who issues Sovereign Gold Bond?
The Bond is issued by Reserve Bank of India on behalf of Government of India.
Denomination of Sovereign Gold Bond
- The Bonds are issued in denominations of one gram of gold and in multiples thereof
- Minimum Investment: 1 gram
- Maximum Investment:
- 4 kg for individuals
- 4 kg for Hindu Undivided Family (HUF)
- 20 kg for trusts and similar entities
- These limits are applicable per financial year
- Payment can be made through cash (upto Rs 20000)/cheques/demand draft/electronic fund transfer
Interest Rate on Sovereign Gold Bond
- The Bonds bear interest at the rate of 2.50% per annum on the amount of 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.
How Sovereign Gold Bond is sold?
Bonds are sold through:
- Offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks
- Designated Post Offices
- Stock Holding Corporation of India Ltd. (SHCIL)
- Authorised stock exchanges either directly or through their agents
Tenor of the Sovereign Gold Bond
- Tenor of bond is 8 years
- Early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates
Tradability of Sovereign Gold Bond
The bond is tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.
Tax on Sovereign Gold Bond
- Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961).
- The capital gains tax arising on redemption of SGB to an individual has been exempted.
We hope you liked this article on What is Sovereign Gold Bond Scheme. Here are some useful government scheme for you to read next:
- Smart Cities Mission in India to develop 100 smart cities
- Everything you need to know about MPLADS Scheme
- Rashtriya Madhyamik Shiksha Abhiyan (RMSA)
- Pradhan Mantri Awas Yojana-Housing for All (Urban)
Tags: sovereign gold bond, gold bond, sovereign gold bond scheme, gold bond scheme, gold bonds india, sovereign gold bond scheme 2017, sovereign gold scheme, what is sovereign gold bond scheme