The seventh series of the Sovereign Gold Bond Scheme 2020-21 will open for subscription today, 12th October 2020. The price of the latest SGB issue has been fixed at 5,051 rupees per gram of gold. Investors applying for the issue online will get a discount of 50 rupees per gram. So the price for them will be 5,001 rupees per gram. The seventh scheme will remain open for one week till 16th October 2020.
The latest SGB scheme which is the seventh comes at a time when gold prices have corrected over 12% from its August high of 56,200 rupees per 10 grams.
Things To Know About The Seventh Series Of Sovereign Gold Bond Scheme
- Gold bonds have a maturity period of eight years and have an exit option after the fifth year. But if an investor is looking for an exit before the lock-in period of 5 years, they can always get out of the bonds by selling it on stock exchanges. The redemption price is based on the then prevailing price of gold when it was bought.
- The price of the scheme is fixed taking the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period. For this purpose, the price published by the India Bullion and Jewellers Association Ltd.
- One can apply for a minimum of 1 gram gold in the scheme. An Individual and a HUF can invest up to 4 kg in the schemes in each financial year. Other eligible entities can invest up to 20 kgs in a year. One can buy these bonds from Stock Holding Corporation, banks, post offices, and recognized stock exchanges.
- Any resident under Foreign Exchange Management Act is eligible to invest in SGBs. An individual, HUF, trusts whether private or public and university can invest in SGBs. A legal guardian can do an investment on behalf of a minor. However, an NRI cannot invest in these bonds. But an NRI can hold these bonds received as a nominee of a resident investor.
- If someone holds SGBs till maturity, there will be no capital gain tax on the investment. Further, the person will get an interest of 2.5% annually, which will be paid on a semi-annual basis.
- SGBs are a superior and better alternative to holding physical gold. Also, in SGB, there is no risk of theft, and the no cost of storage.
- The Reserve Bank of India issues these schemes on behalf of the Indian government.
- Some of the documents required to apply for these gold bonds are Voter ID, Aadhaar card/PAN, or TAN /Passport.
- According to analysts, SGBs should be a part of the investment portfolio as it helps in diversification. According to financial planners, at least 10-15% of an individual’s portfolio should be invested in gold.
- Unlike in physical gold, GST is not levied on the SGBs.