Govt to issue Sovereign Gold Bond 2020-21 from April 2020 to September 2020; details here


New Delhi: In session with the Reserve Bank of India (RBI), the federal government on Monday (April 13) determined to issue Sovereign Gold Bonds, which will likely be issued in six tranches from April 2020 to September 2020, stated a Ministry of Finance assertion.

“The bonds will be sold through scheduled commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited,” it stated.

The calendar for six tranches is given under:

The key options of the Gold Bonds are:

Issuance: The Reserve Bank of India will issue it on behalf of the Government of India.

Eligibility: The Bonds will likely be restricted on the market to resident people, HUFs, Trusts, Universities and Charitable Institutions.

Denomination: The Bonds will likely be denominated in multiples of gram(s) of gold with a primary unit of 1 gram.

Tenor: The tenor of the Bond will likely be for a interval of eight years with exit choice after 5thyear to be exercised on the curiosity fee dates.

Minimum measurement: Minimum permissible funding will likely be 1 gram of gold.

Maximum restrict: The most restrict of subscription shall be Four KG for particular person, 4 Kg for HUF and 20 Kg for trusts and related entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this impact will likely be obtained. The annual ceiling will embody bonds subscribed beneath completely different tranches throughout preliminary issuance by Government and people bought from the Secondary Market.

Joint holder: In case of joint holding, the funding restrict of Four KG will likely be utilized to the primary applicant solely.

Issue worth: Price of Bond will likely be mounted in Indian Rupees on the idea of easy common of closing worth of gold of 999 purity, revealed by the India Bullion and Jewellers Association Limited for the final three working days of the week previous the subscription interval. The issue worth of the Gold Bonds will likely be ` 50 per gram much less for many who subscribe on-line and pay by way of digital mode.

Payment choice: Payment for the Bonds will likely be by way of money fee (upto a most of `20,000) or demand draft or cheque or digital banking.

Issuance type: The Gold Bonds will likely be issued as Government of India Stock beneath GS Act, 2006. The buyers will likely be issued a Holding Certificate for a similar. The Bonds are eligible for conversion into demat type.

Redemption worth: The redemption worth will likely be in Indian Rupees based mostly on easy common of closing worth of gold of 999 purity, of earlier three working days revealed by IBJA Ltd.

Sales channel: Bonds will likely be bought by way of Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated submit places of work (as could also be notified) and recognised inventory exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, both immediately or by way of brokers.

Interest price: The buyers will likely be compensated at a set price of two.50 p.c each year payable semi-annually on the nominal worth.

Collateral: Bonds can be utilized as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to strange gold mortgage mandated by the Reserve Bank from time to time.

KYC documentation: Know-your-customer (KYC) norms would be the similar as that for buy of bodily gold. KYC paperwork corresponding to Voter ID, Aadhaar card/PAN or TAN /Passport will likely be required. Every software should be accompanied by the ‘PAN Number’ issued by the Income Tax Department to people and different entities.

Tax therapy: The curiosity on Gold Bonds shall be taxable as per the availability of Income Tax Act, 1961 (43 of 1961). The capital positive aspects tax arising on redemption of SGB to a person has been exempted. The indexation advantages will likely be offered to long run capital positive aspects arising to any particular person on switch of bond.

Tradability: Bonds will likely be tradable on inventory exchanges inside a fortnight of the issuance on a date as notified by the RBI.

SLR eligibility: Bonds acquired by the banks by way of the method of invoking lien/hypothecation/pledge alone, shall be counted in the direction of Statutory Liquidity Ratio.

Commission: Commission for distribution of the bond shall be paid on the price of 1% of the whole subscription acquired by the receiving places of work and receiving places of work shall share a minimum of 50% of the fee so acquired with the brokers or sub brokers for the enterprise procured by way of them.

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