12th tranche of the sovereign gold bond scheme 2021, opened today for subscription, and will be available for investing till Friday, March 5, 2021.
As part of the gold bond scheme, the Reserve Bank of India (RBI) issues interest-paying bonds linked to the market price of the yellow metal. RBI issued the gold bonds in a series of six tranches, starting from October 2020. For the 12th installment of the gold bond scheme, an issue price of ₹ 4,662 per unit, equivalent to the value of one gram of gold, applies, according to the RBI.
What Section 47 Of I-T Act speak about Sovereign Gold bond scheme?
Section 47 of the Income-Tax (I-T) Act states that any transfer of Sovereign gold bonds (SGBs), issued by the Reserve Bank of India (RBI) under the Sovereign Gold Bond Scheme, 2015, by redemption, by an individual taxpayer shall not be treated as a transfer for capital gain.
Research and advisory firm, Tax experts says, Section 47 still refers to the sovereign gold bond issued under the Sovereign Gold Bond Scheme, 2015. However, the government issues series of tranches for five days of sovereign gold bond scheme every year.
Tax expert said in its pre-budget recommendations to the government that they should consider an amendment in section 47 to remove the reference of any year from the sovereign gold bond scheme.
Sovereign gold Bond dates
Following are the dates for sovereign gold bond
|S. No.||Tranche||Date of Subscription||Date of Issuance|
|1.||2020-21 Series VII||October 12 – 16, 2020||October 20, 2020|
|2.||2020-21 Series VIII||November 09 – 13, 2020||November 18, 2020|
|3.||2020-21 Series IX||December 28, 2020 – January 01, 2021||January 05, 2021|
|4.||2020-21 Series X||January 11-15, 2021||January 19, 2021|
|5.||2020-21 Series XI||February 01- 05, 2021||February 09, 2021|
|6.||2020-21 Series XII||March 01- 05, 2021||March 09, 2021|
Latest price of SGB Tranche- IV maturing in Aug 2024. Listed on 01/09/2016.
You can check latest price for all the listed tranches of sovereign gold bond on NSE by clicking on the below link.
FAQ ON SOVEREIGN GOLD BOND FUND
1. What is Sovereign gold bond (SGB)? Who is the issuer of these bonds?
SGBs are government securities denominated in Unit of grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and Investor can redeem the bonds in cash on maturity. The Central Bank issues the Bond on behalf of the Government of India.
2. Why should I buy SGB rather than physical gold?
Sovereign gold bond vs Physical Gold. It protects the quantity of gold for which the investor pays, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternate option to holding gold in physical form. It eliminates the risks and costs associated with storing. It assure investors of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity with gold in jewellery form. It holds the bonds in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
3. Is there any risks in investing in SGBs?
There may be a risk of losing capital investment if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.
4. Can I purchase SGB in a joint name?
Yes, You can hold sovereign gold bond in joint name.
5. Who is eligible to invest in the SGBs?
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, firms and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
6. Can a minor invest in SGB?
Yes. A minor can very well invest in SGB. Only conditions is that he/she needs to fill the application in name of his/her guardian.
7. Where can we get the SGB application form?
The issuing banks/SHCIL offices/designated Post Office/agents will provide the application form for SGB. You can also download the application form from the RBI’s website. Banks may also provide online application facilities.
8. What are the know-your-customer (KYC) norms for SGB?
The ‘PAN Number’ issued by the Income Tax Department to the investor must accompany every application (s). It requires full KYC for applying in sovereign gold bond.
9. Can an investor hold over one investor ID for subscribing to the Sovereign gold bond?
No. An investor can have only one unique investor Id linked to any of the prescribed identification documents. For any holding securities in dematerialized form, PAN in the application form is mandatory.
10. What is the minimum limit for investment in SGB?
RBI issue Sovereign gold bonds in denominations of one gram of gold and in multiples thereof. Minimum investment in the Bond shall be one gram.
11. What is the maximum investment in SGB?
There is the maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April–March). In case of joint holding, the limit applies to the first applicant only. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
12. Can each member of my family buy 4Kg in their own name?
Yes, each family member can buy the bonds in his/her own name if they satisfy the eligibility criteria as defined at Quer No.4.
13. Can an investor/trust buy 4 Kg/20 Kg worth of SGB every year?
Yes. An investor/trust can buy 4 Kg/20 Kg worth of gold every year as RBI have fixed the ceiling on a fiscal year (April-March) basis.
14. Is the maximum limit of 4 Kg applicable in case of joint holding?
The maximum limit will apply to the first applicant in case of a joint holding for that specific application.
15. What is the rate of interest & how will pay the interest?
Presently Sovereign gold bonds bear interest at 2.50 percent (fixed rate) per annum on the amount of initial investment. In starting Tranches SGB was bearing interest at 2.75 percent.
Investor will get Interest semi annually in the bank account and the last interest will be payable on maturity along with the principal.
16. Who are the allowed agencies selling the SGBs?
RBI sell bonds through offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated Post Office, Stock Holding Corporation of India Ltd. (SHCIL) and the allowed stock exchanges either directly or through their agents.
17. If I apply, am I assured of allotment?
If the customer meets the eligibility criteria, produces a valid identification document and remits the application money on time, he/she will receive the allotment.
18. When will the customers get a holding certificate of SGB?
RBI will issue the customers, Certificate of Holding on the date of issuance of the SGB. Investor can collect Certificate of Holding from the issuing banks/SHCIL offices/Post Office/Designated stock exchanges/agents or they can take directly from RBI on email, if investor has disclosed email in the application form.
19. What is the benefit of apply SGB online?
Yes. A customer can apply online through the website of the listed scheduled commercial banks. The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value to those investors applying online and they make the payment against the application through digital mode.
20. What is selling price of sovereign gold bond?
The nominal value of gold bonds shall be in Indian Rupees fixed based on the simple average closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.
21. When RBI publish the rate of gold?
RBI will publish the price of gold for the relevant tranche on RBI website two days before the issue opens. They mention all the details about the relevant Tranche of SGB.
22. What will I get redemption of SGB?
On maturity, Investor can redeem his Sovereign Gold Bonds holdings in Indian Rupees and the redemption price shall be based on the simple average closing price of gold of 999 purity of previous 3 business days from the repayment date, published by the India Bullion and Jewelers Association Limited.
23. How will I get the redemption amount of SGB?
RBI will credit both interest and redemption proceeds to the bank account furnished by the customer at the time of buying the bond.
24. What is the SGB redemption process?
A bond holder of SGB should start the process one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, RBI will credit the maturity proceeds to the bank account as per the details on record.
In case there are changes in any details, such as, account number, email IDs, then the investor must intimate the bank/SHCIL/PO promptly.
25. Can I sell the bond anytime I want? Is premature redemption allowed in SGBs?
Though the tenor of the bond is 8 years, early encashment/ redemption of the bond is allowed after the fifth year from an issue on coupon payment dates. The bond will be tradable on Exchanges, if held in D-mat form. Investor can also transfer it to any other eligible investor.
26. How can I exit my SGB investment?
In case of premature redemption, investors can approach the concerned bank/ SHCIL offices/ Post Office/ agent thirty days before the coupon payment date. Bank entertain requests for premature redemption only if the investor approaches the concerned bank/post office at least one day before the coupon payment date. They will credit the proceeds to the customer’s bank account provided at the time of applying for the bond.
27. Can I gift the bonds to a relative or friend?
Investor can gift/transfer the SGB to a relative/friend/anybody who fulfills the eligibility criteria (as mentioned at Q. No. 4). He can transfer the Bonds under the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.
28. Can I use SGBs as collateral for loans?
Yes, these securities (Sovereign gold bonds) are eligible as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loans prescribed by RBI from time to time.
Granting loans against SGBs would be subject to the decision of the bank/financing agency, and cannot be inferred as a matter of right.
29. What are the tax implications on Sovereign Gold Bonds?
Interest on the Bonds will be taxable as per the Income-tax Act, 1961 (43 of 1961). Income tax department has exempted the capital gains tax arising on redemption of SGB to an individual.
They will provide the indexation benefits to long terms capital gains arising to any person on transfer of bond.
30. Is tax deducted at source (TDS) applicable on the SGB?
TDS is not applicable on the bond. However, it is the responsibility of the bondholder to comply with the prevailing tax laws.
31. Who will provide other customer services to the investors after issuance of the Sovereign Gold Bonds?
The issuing banks/ SHCIL offices/ Post Office/ Designated stock exchanges/agents through which Investors have purchased these securities will provide other customer services such as change of address, early redemption, nomination, grievance redress, transfer applications.
32. What are the payment options for investing in the Sovereign Gold Bonds?
We can make payment through cash (up to ₹ 20000)/ cheques/ demand draft/ electronic fund transfer.
33. Can I give nomination for Sovereign gold bond investments?
Yes, nomination facility is available as per the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with an Application form. An individual Non–resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:
The Non-Resident investor shall need to hold the security till early redemption or till maturity; and the interest and maturity proceeds of the investment shall not be Repatriable.
34. Can I get the SGB bonds in D-mat form?
Yes. Investors can hold Sovereign gold bonds in D-mat account. Investor must make a specific request for the same in the application form itself.
Till the process of dematerialization completes, it will hold the bonds in RBI’s books. The facility for conversion to D-mat will also be available after the allotment of the bond.
35. Can I trade sovereign gold bonds on NSE?
The bonds are tradable on exchanges as soon as RBI transfer them in the D-mat of holder. (we may note it that holder can only sell bonds held in D-mat form with depositories in stock exchanges). Holder of the bonds can also sell and transfer them as per provisions of Government Securities Act, 2006. Partial transfer of sovereign gold bonds is also possible.
36. What will happen to SGB in case of death of an investor?
The nominee/nominees to the bond may approach the respective Receiving Office with their claim. The claim of the nominee/nominees will be recognized in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007. In the absence of nomination, Executors/ administrators/Successor of the deceased/ holder of the succession certificate (issued under Part X of Indian Succession Act) may submit the claim to the Receiving Offices/Depository.
They may note it that the above provisions apply with a deceased minor investor as well. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.
37. Can I sell part holding in sovereign gold bond at the time of exercising the put option?
Yes, You can redeem part holdings in multiples of one gram.
38. What are Sovereign gold bond returns of the current series?
For the current price of all the listed sovereign gold bonds, Click the NSE link.
39. how to contact RBI for sovereign gold bond queries?
Reserve Bank of India has created a dedicated email to receive queries from members of the public on Sovereign Gold Bonds. Investors can mail their queries to this email id.