Sovereign Gold Bond Scheme 2021-2022 Series – 1 will be open for public subscription for five days, starting from 17th May 2021 to 21st May 2021 .The government has decided to issue bonds in six tranches from May 2021 to Sept 2021. The issue price for bond has been fixed at INR 4,777 per gram. The price so fixed is calculated as per the simple average of the closing price of 999 purity gold (as published by the India Bullion and Jewellers Association Limited) of the last three working days of the week prior to the subscription period.
This scheme was launched way back in November 2015, so as to shrink the demand for gold and divert domestic savings spent on buying gold to financial savings.
Some FAQ’s w.r.t SGB Scheme:
Q1) When is the public issue open for subscription?
A1) The offer opens for the public to subscribe on 17th May 2021 and ends on 21st May 2021. This scheme will be available in six tranches as decided by the RBI and will be available in a phased process from May 2021 to Sept 2021.
Q2) What is the issue price of the bond?
A2) The issue price of the bond is fixed at INR 4.777 per gram. This price is calculated as simple average of the closing price of 999 purity gold (as published by the Indian Bullion and Jewellers Association Limited) on the last three working days of the week prior to the subscription period.
INR 50 less will be charged from the subscription applications received online as per the ministry.
Q3) What is the total tenor of the bond?
A3) This bond is for the total period of 8 years, however there is an exit option after 5 years which can be exercised on the upcoming interest payment dates.
Q4) What is the minimum and the maximum permissible investment limits?
A4) The minimum permissible limit for subscription can be nothing less than 1 gram of gold and the maximum subscription limit is fixed at 4 kg for an HUF and 20 kg for entities like trust and such similar bodies as notified by the government for each fiscal year i.e. April – March.
Q5) When will the bonds be issued?
A5) The date of issue of the SGB is 25th May 2021.
Q6) Where can the application for bonds be bought?
A6) The bonds are available at the banks (not the payment banks and the small finance banks), designated post offices, Stock Holding Corporation of India(SCHIL), Bombay Stock Exchange(BSE) and National Stock Exchange(NSE). The form are also available on RBI website and can be downloaded.
Q7) What are the holding options available as prescribed?
A7) These bonds can be held jointly and also by the minor given that the said application has to be made by the parent/guardian on behalf of the minor.
Q8) What is the rate of interest and how will it be paid?
A8) The Bonds possess 2.5% fixed rate of interest per annum over the initial investment amount. The interest amount will be credited biyearly to the bank account of the investor and the final interest shall be payable at the time of maturity along with the principal amount.
Q9)Is premature redemption allowed?
A9) Although the tenor of the bond is 8 years but redemption is allowed after 5th year from the date of issue.
Q10) Can the bond be kept in DEMAT form?
A10) The bonds can be converted into DEMAT form and are easily tradable in stock exchanges. These are also eligible to be transferred to any other eligible investor.
Q11) Is Tax Deducted at Source applicable on these bonds?
A11) No TDS is applicable but interest earned is exposed to the regular tax laws.
Q12) What are the tax implications on Capital Gains and Interest amount?
A12) Tax provisions as per Income Tax Act 1961 are applicable on the interest earned as such. No, Long Term Capital Gain Tax is applied on the value of the bonds however Indexation benefit is provided to the SGB at the time of redemption of such bonds on the LTCG arising on the person making such transfers.
Q13) What are the KYC norms to be followed?
A13) All the norms followed for the buying of physical gold are applicable i.e. each application has to be accompanied by the PAN of the investor.
