Government Announces Dates for Sovereign Gold Bond Subscription, Details Here

Sovereign Gold Bond: In the first half of the current fiscal year, the government has chosen to issue two tranches of sovereign gold bonds (SGBs). The Reserve Bank of India (RBI) said in a statement that the subscription period for the 2023–24 Series I will be from June 19–23, 2023, and the Series II will be from September 11–15, 2023. Series I's issuance date is June 17, while Series II's issue date is September 20, according to RBI.

Sovereign Gold Bonds (SGBs) to be Sold via Post Offices

According to the statement, the SGBs will be sold through designated post offices, recognised stock exchanges, such as the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited, as well as Scheduled Commercial banks (aside from Small Finance Banks, Payment Banks, and Regional Rural Banks).

Eligibility

Only residents, HUFs, Trusts, Universities, and Charitable Institutions will be permitted to purchase SGBs.

Denomination

The SGBs will have a base unit of one gramme and be denominated in multiples of gram(s) of gold.

Tenor

The SGB will have an eight-year tenor with an early redemption option after the fifth year that must be taken on the date when interest is due.

Investment Limit

One gramme of gold will be the smallest investment that is allowed. The maximum subscription limit every fiscal year (April-March), as announced by the government from time to time, shall be 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar businesses. At the time of submitting a subscription application, investors will be asked to make a self-declaration to this effect. The SGBs subscribed in various tranches and those bought on the secondary market during the fiscal year will both be counted towards the yearly ceiling.

Issue Price

The price of SGB shall be determined in Indian rupees using the simple average of the closing price of 999-purity gold for the final three working days of the week prior to the subscription period, as announced by the India Bullion and Jewellers Association Limited (IBJA). For investors who subscribe online and make payment in digital form, the issue price of the SGBs would be reduced by Rs 50 per gramme.

Redemption Price

The redemption price will be determined in Indian rupees based on the three-day rolling simple average of the closing price of 999-purity gold provided by IBJA Ltd.

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Interest Rate

The investors will receive a fixed 2.50 percent annual return on the nominal value, payable every six months.

Tax Treatment

The provisions of the Income Tax Act of 1961 (43 of 1961) apply to the taxation of interest on SGBs. On the redemption of SGB to an individual, there is no capital gains tax due. Long-term capital gains that are realised by any individual upon the transfer of the SGB shall be eligible for the indexation benefits.

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