Subscription dates, Duration, Interest, Price; Know all the details

The government has decided to issue sovereign gold bonds in two tranches in the financial year 2022-23. The first tranche will be open for subscription from June 20 to 24, while the second tranche will be open from August 22 to 26.

“Sovereign Gold Bonds (SGB) will be sold through regular commercial banks (except small financial banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices and recognized stock exchanges namely, National Stock Exchange of India Limited and Bombay Stock Exchange Limited,” the Ministry of Finance said in a statement.

The issue date for Series I 2022-23, which will remain open for subscription between June 20 and June 24, will be June 28. The Series II 2022-23 issue date, which will open for subscription on August 22 and close on August 26, will be August 30, according to the release.

Investors will be remunerated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.

The price of SGB will be priced in Indian Rupees based on a simple average of the closing price of 999 purity gold as published by the India Bullion and Jewelers Association Limited (IBJA) for the last three business days of the week preceding the subscription period. The issue price of SGBs will be lower by Rs 50 per gram for investors who subscribe online and pay digitally.

The ministry said the SGBs, which will be issued by the Reserve Bank of India on behalf of the government, will be restricted to sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.

Payment for SGBs will be by cash payment (up to a maximum of Rs 20,000) or by sight draft or by check or electronic banking.

The bonds will be denominated in multiples of grams of gold with a base unit of one gram and their term will be for an eight-year term with an early redemption option after the 5th year to be exercised on the date on which the interest are payable.

The minimum investment allowed will be one gram of gold, while the maximum subscription limit will be four kg for individuals, 4 kg for HUFs and 20 kg for trusts and similar entities per fiscal year (April-March) notified by the government from time to time. at the time.

A self-declaration to this effect will be obtained. The annual cap will include the SGBs subscribed in the different tranches, and those purchased on the secondary market, during the financial year.

“The SGBs will be issued as shares of the Government of India under the Government Securities Act 2006. Investors will receive a participation certificate for the same. SGBs will be eligible for conversion as a demat,” the ministry said.

The redemption price will be in Indian Rupees based on the simple average of the closing price of 999 purity gold, for the previous three working days published by IBJA Ltd.

Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio must be equal to the ordinary gold loan mandated by the Reserve Bank from time to time, the finance ministry said in the statement.

“Interest on SGBs is taxable under the provisions of the Income Tax Act 1961 (43 of 1961). Capital gains tax on the redemption of SGBs from an individual is exempt. The benefits of indexation will be provided to long-term capital gains arising from any person upon transfer of bonds.GBS will be eligible for trading,” he added.

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Garland K. Long