The third tranche of the gold bond scheme (GBS) opened for subscription on Tuesday. The bonds are offering a fixed return of 2.75 per cent per annum, payable on a half-yearly basis.
Applications for the bonds will be accepted from March 8 to March 14 and allotment will be made on March 29.
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 Government of India.
BENEFITS
- The Sovereign Gold Bonds will be available both in demat and paper form.
- The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
- They will carry sovereign guarantee both on the capital invested and the interest.
- Bonds can be used as collateral for loans.
- Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
- Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.
- In Sovereign Gold Bonds, capital gains tax treatment will be the same as for physical gold for an ‘individual’ investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.
The bonds are sold through banks, Stock Holding Corporation of India Limited (SHCIL) and designated post offices.
While SGBs is tradable, they have less liquidity compared with gold ETFs. But SGB holders get an additional 2.75 per cent return annually, which ETFs do not pay.
