Gold bonds enable investors to park their funds in non-physical gold and even earn interest
The fifth tranche of government-run Sovereign Gold Bonds 2020-21 will open for subscription next month. The gold bond scheme will be available for investment from August 3 to August 7, and then from August 31 to September 4. Gold prices in the country have stayed at record highs for past few weeks, Under the Sovereign Gold Bond programme, the Reserve Bank of India issues bonds liked to the market price of gold on behalf of government. Gold bonds enable investors to park their funds in non-physical gold and even earn interest, subject to investment limits.
Here’s all you need to know about the Sovereign Gold Bond (SGB) programme:
Important Dates
The Sovereign Gold Bonds, which have already opened for subscription for five days each four times this financial year, will be available for 10 more days on the following dates:
| Series | Subscription | Issuance Date |
|---|---|---|
| V (2020-21) | From August 3 to August 7 | August 11 |
| VI | From August 31 to September 4 | September 8 |
(The first series of Sovereign Gold Bonds 2020-21 opened for subscription for five days in April)
Issue Price
For each tranche, the issue price is calculated based on a simple average of rates of the three sessions before the opening of the subscription window provided by Mumbai-based India Bullion and Jewellers Association (IBJA). The fourth tranche, which was open for subscription from July 6 to July 10, was available at an issue price of Rs 4,852 per gram.
Discount
A discount of Rs 50 per gram is available for online purchasers, to promote digital payments.
Interest Rate
Investment in gold bonds fetches interest at a rate of 2.50 per cent per annum. The interest is payable on a semi-annual basis.
Tax
The interest earned from investment in gold bonds is taxable. However, individual investors are exempt from paying taxes on the capital gains arising out of redemption. (Also Read: Should You Invest In Sovereign Gold Bonds? | Where To Buy Sovereign Gold Bonds)
Lock-In Period
Funds parked in the Sovereign Gold Bond programme are locked in for eight years. An exit option is available after the first five years of subscription.
Who Can Buy
Resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions can invest in the SGB scheme.
How To Buy
Gold bonds can be bought from the designated branches of banks and post offices, through stock exchanges BSE and NSE, and the Stock Holding Corporation.