The Government of India in consultation with the
Reserve Bank of India has decided to allow discount of Rs 50 per gram to those
investors who apply online, and the payment is made through digital mode. The
second tranche of the sovereign gold bond scheme 2021-22 opens for subscription
on Monday (May 24, 2021). According to the Reserve Bank of India's schedule set
for the gold bond scheme 2021-22, the second tranche window will be open for
investors between May 24 and May 28. In a statement on Friday, May 21, the
Ministry of Finance, in consultation with the central bank, announced the issue
price of gold bonds which will be available in the second tranche of the
scheme. According to RBI, an issue price of Rs 4,842 per unit, equivalent to
the value of one gram of gold, is applicable for the second instalment of the
gold bond scheme 2021-22. The Government of India in consultation with the
Reserve Bank of India has decided to allow discount of Rs 50 per gram from the
issue price to those investors who apply online, and the payment is made
through digital mode. For such investors, the issue price of Gold Bond will be
Rs 4,792 per gram of gold. The date of issuance for the second tranche is set
as June 1, 2021.
What are SGBs?
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. The
Bond is issued by Reserve Bank on behalf of the government of India.
Who can invest in SGB?
Any resident under Foreign Exchange Management Act
(FEMA) can invest in SGBs. An individual, HUF, trusts whether public or private
and universities can invest in SGBs. Even investment on behalf of a minor can
be made by his guardian. An NRI cannot invest in these bonds but can hold these
bonds received as a nominee of a resident investor. KYC documents such as Voter
ID, Aadhaar card/PAN or TAN /Passport are needed for buying the SGB.
The application for SGB has to be made in the minimum
lot of one gram and in multiples of one gram maximum up to the permissible
limits. An Individual and a HUF can invest up to four kg in SGBs in each
financial year. Other eligible entities can invest up to 20 kg in a year. The
investors can make a nomination in favour of any person in respect of the bonds
subscribed or purchased by them.
How is the SGB price fixed?
The issue price of sovereign gold bonds is fixed based
on the recent closing price of gold as published by the India Bullion and
Jewellers Association Ltd for gold of 999 purity. The minimum permissible
investment in gold bonds is one gram of gold.
Gold bond Maturity period
Gold bonds have a maturity period of eight years, but
investors will have the option to exit after the fifth year. However, if an
investor is eyeing an exit before the lock-in period of 5 years, they can
always get out of the bonds by selling it on stock exchanges.
Tax implications
These bonds score over physical gold and other assets
on the taxation front as they do not attract capital gains tax if held until
maturity. If sold before maturity, then short term capital gains will be taxed
as per slab rates and long-term capital gains are taxed at 20.8 % after
indexation. However, if gold bonds are listed then the long term will be
considered as one year. Interest earned on sovereign gold bonds every year is
taxed as per your slab rates.
The investor does not have to worry about the storage
of gold if held in demat form and there is no GST levy, unlike in physical
gold.
Documents required
KYC documents such as Voter ID, Aadhaar card/PAN or
TAN /Passport are needed for buying the SGB scheme.
Where to buy SGBs?
Individuals can buy gold bonds from commercial banks, Stock Holding Corporation of India Limited (SHCIL), post offices designated by RBI and recognised stock exchanges, either directly or through agents.
Why invest in SBGs?
SGBs are issued by the government at regular intervals
at the prevailing gold price. It has a fixed tenure of eight years but can be
sold after a lock-in of five years. However, if you hold SGBs till maturity,
there will be no capital gain tax on the investment. You will get an interest
of 2.5% annually, which will be paid semi-annually.
The quantity of gold for which the investor pays is protected since they receive the ongoing market price at the time of redemption/ premature redemption. SGB offers a superior alternative to holding gold in physical form. Also, risks and costs of storage are eliminated in the case of these bonds. Investors are assured of the market value of gold at the time of maturity and periodical interest.
Additionally, SGB is also free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in Demat form eliminating the risk of loss of scrip etc. According to experts, SGBs remain the best vehicle to participate in gold for the long term if the intent is to hold the bonds until maturity. One can also sell SGBs in the secondary market.
Source : www.timesnownews.com
------------------------------- The end -------------------------
No comments:
Post a Comment