Tag: Sovereign Gold Bond

Sovereign gold bond July 2020: Scheme opens for subscription today; here’s what you need to know

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The fourth installment (series IV) of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 4,582 per gram of the yellow metal. Online subscribers can however secure these bonds at a discount of Rs 50 per gram.
This subscription of bonds will close on July 10, according to Reserve Bank of India (RBI).

Here’s all you need to know about Sovereign Gold Bond (SGB) scheme:

What is SGB?

SGB is issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. These are restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

(Also read: Gold investment explained: How are different forms of yellow metal taxed)

How is the price determined?

The price is determined on the basis of a simple average of the closing price 999-purity gold published by the Mumbai-based India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding subscription.

Eligibility

The Sovereign Gold Bond (SGB) is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

Interest rate

A fixed rate of 2.5 percent per annum is applicable on the SGBs, payable semi-annually.

(Also read: Gold ETFs versus sovereign bonds: Where should you invest)

Investment limits

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum subscription limit for SGBs is 4 kg for individual, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March).

Tenor and exit options

The tenor of the bond is for a period of eight years with exit option after fifth year to be exercised on the interest payment dates.

Tax treatment

The interest on gold bonds are taxable as per the provision of Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long term capital gains arising to any person on transfer of bond.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Plan to invest in gold? Here are 3 electronic investment options you can choose from

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold investment is considered as a means to bring financial security in one’s portfolio. The high liquidity and inflation-beating capacity add to its ability. There are several gold investment options available in the market. The traditional gold investment mode is purchasing physical gold. However, with physical gold, people generally have to pay for associated charges. Analysts, hence, suggest going for electronic gold.

Here are 3 types of gold investments which can be considered in place of physical gold buying:

Gold exchange-traded funds (ETFs)

Gold ETFs are closed-end funds that require a Demat account. Gold almost equivalent of physical gold is deposited in an electronic form. These are listed on the stock exchange, where one can get real-time updates about their price. ETFs don’t have any exit loads, which means investors can buy or sell the units at any time during the market hours.

Sovereign gold bond (SGB) scheme

SGB is a certification scheme in which the RBI issues bonds on behalf of the Government of India. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. They are substitutes for holding physical gold. Investors are required to pay the issue price in cash, and the bonds are redeemed in cash on maturity.

These bonds are sold through scheduled commercial banks (except small finance banks and payment banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges viz., National Stock Exchange of India Ltd, and Bombay Stock Exchange Ltd, according to RBI.

Gold mutual funds

Gold mutual funds are open-ended funds that allows the citizens to invest without a Demat account. The gold fund units are determined by way of Net Asset Value (NAV), which is disclosed at the end of the trading hours. In this scheme, experts manage the investment professionally to create wealth and reduce risks.

“They yield substantial returns to the investor. One can begin investments from Rs 1,000,” as per ClearTax.

(Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bonds open for subscription today: Here’s all you need to know

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The series-III of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 4,677 per gram of the yellow metal. Online subscribers can however secure these bonds at a discount of Rs 50 per gram.

This subscription of bonds will close on June 12, according to Reserve Bank of India (RBI).

Here’s all you need to know about Sovereign Gold Bond (SGB) scheme:

SGBs are issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. These are restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

(Also read: Gold investment explained: How are different forms of yellow metal taxed)

The price is determined on the basis of a simple average of the closing price 999-purity gold published by the Mumbai-based India Bullion and Jewellers Association (IBJA) for the last three working days of the week preceding subscription.

A fixed rate of 2.5 percent per annum is applicable on the SGBs, payable semi-annually.

The minimum permissible amount allowed for investment in SGB is one gram of gold.

(Also read: Gold ETFs versus sovereign bonds: Where should you invest)

The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time. In case of joint holding, the investment limit of 4 kilograms is applied to the first applicant only.

The interest on gold bonds are taxable as per the provision of Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long term capital gains arising to any person on transfer of bond.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold ETFs versus sovereign bonds: Where should you invest?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Looking to invest in paper gold? Well, one can do that either through gold exchange-traded funds (ETFs) or sovereign gold bonds (SGBs). With these avenues, investors do not get any physical possession of the yellow metal. Instead, these investments are required to be redeemed to get returns.

Unlike physical gold, gold ETFs and bonds earn handsome returns and on top of it give tax benefits, according to experts.

Let’s check the difference between gold bonds and ETFs:

Basic definition

SGBs are issued by the government, for which investors get a holding certificate. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity and are also eligible for conversion into demat form.  These bonds provide an interest of 2.5 percent on the initial investment, payable half-yearly till maturity period of 8 years. The market price of the bond moves in line with domestic gold prices.

Gold ETFs, on the other hand, are listed instruments whose market price is linked to domestic gold prices.

Maximum Quantity

The maximum subscription limit for SGBs is 4 kg for individual, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal (April-March).

“There is no such limit for Gold ETFs, however,  investors would have to bear large bid-ask spread on the exchange due to low volumes,” explains Ashish Shanker, Head Investment, Motilal Oswal Private Wealth Management.

Tax Treatment

According to Shanker, interest from SGBs is taxable as per the investor’s income slab. The capital gains on SGB is tax-exempt if held till maturity, and if exited post 5 years and before maturity, the capital gain is subject to tax at 20 percent with indexation benefit.

Gold ETFs, meanwhile, are taxed at 20 percent with indexation benefit if held for equal to or more than 3 years, and at the marginal rate if held for less than 3 years.

Return Benefit

The rates of ETF and SGB are linked to physical gold rates.

“So, the capital appreciation benefit of both the investment products are the same. However, in addition to capital gain benefit, SGB also offers interest at 2.5 percent on the invested value to its investors. So, those who are investing for a very long period, 2.5 percent interest can make a big difference to the overall return,” as per BankBazaar.

Loan Facility

Loan against gold is a very popular borrowing product. The loan facility is allowed against SGB. However, such a loan facility is not allowed against the ETF.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bond series II opens for subscription today: 10 things to know before you invest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The series-II of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 4,590 per gram of the yellow metal. Online subscribers can however secure these bonds at a discount of Rs 50 per gram.

This subscription will close on May 15 and certificate of the bonds will be issued on May 19, according to Reserve Bank of India (RBI).

“The idea of a gold bond is to reduce demand for physical gold and move it to paper gold, which is free of making and moulding charges,” said Nish Bhatt, Founder & CEO, Millwood Kane International- an investment consulting firm

Here are key things to know about Sovereign Gold Bond (SGB) scheme:

1. SGB is a certificate scheme in which the RBI issues bonds on behalf of Government of India. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash.
2. The SGB  is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.
3. The bonds are redeemed in cash on maturity.
4. It bears interest at the rate of 2.5 percent per annum on the amount of the initial investment.
5. The SGBs are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
6. The tenor of the bond are for a period of 8 years with exit option after fifth year to be exercised on the interest payment dates.
7. The minimum permissible amount allowed for investment in SGB is one gram of gold.
8. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time.
9. These bonds are 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 Ltd and Bombay Stock Exchange Ltd, according to RBI.
10. The interest on gold bonds are taxable as per the provision of Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bonds open for subscription today: Key things to know before you invest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The series-I of the Sovereign Gold Bond (SGB) scheme for 2020-21 opened for subscription on Monday. The issue price for the same has been fixed at Rs 4,639 per gram of the yellow metal. Online subscribers can secure these bonds at a discount of Rs 50 per gram.

This subscription will close on April 24 and certificate of the bonds will be issued on April 28, according to Reserve Bank of India (RBI).

Given below are key things to know about Sovereign Gold Bond (SGB) scheme:

What is SGB and how it works

SGB is a certificate scheme in which the RBI issues bonds on behalf of Government of India. It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.

Eligibility

The Sovereign Gold Bond (SGB) is restricted for sale to resident individuals, HUFs (Hindu Undivided Families), trusts, universities and charitable institutions.

How it is sold

These bonds are 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 Ltd and Bombay Stock Exchange Ltd, according to RBI.

Interest rate

It bears interest at the rate of 2.5 percent per annum on the amount of the initial investment.

(Also read: Keep these things in mind before investing in the yellow metal)

Denomination

The bonds are denominated in the multiples of one gram of gold.

Tenor and exit options

The tenor of the bond is for a period of eight years with exit option after fifth year to be exercised on the interest payment dates.

Investment Limit

The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time. In case of joint holding, the investment limit of 4 kilograms is applied to the first applicant only.

Tradability

Bonds are tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.

Tax treatment

The interest on gold bonds are taxable as per the provision of Income Tax Act. The capital gains tax arising on redemption of SGB to an individual is, however, exempted. The indexation benefits are provided to long term capital gains arising to any person on transfer of bond.

Should one invest?

According to Ravindra Rao, VP- Head Commodity Research at Kotak Securities, SGB is a good bet when it comes to gold investment.  “It pays interest of 2.5 percent along with the price appreciation which no other gold investment offers,” he explains.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

All you need to know about sovereign gold bond scheme 2020-21

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI), after consultation with the government, recently announced the issue dates of the sovereign gold bond (SGB) scheme 2020-21. The first tranche (2020-21 Series I) for subscription will open on April 20 and close on April 24. The bonds will be issued on April 28. The sixth tranche (2020-21 Series VI) has been scheduled for August 31-September 4.

In view of this, let’s understand what is SGB and how it works:

• SGB is a government-run scheme that allows gold investments in non-physical form.
• It comprises government securities denominated in gold wherein investors are required to pay the issue price in cash. The bonds are redeemed in cash on maturity.
• It bears interest at the rate of 2.5 percent per annum on the amount of the initial investment.
• These bonds are 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 Ltd and Bombay Stock Exchange Ltd, according to RBI.
• These are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.
• The SGBs are denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
• The issue price of these bonds are fixed in Indian rupee on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd for the last 3 working days of the week preceding the subscription period.
• The tenor of the bond are for a period of 8 years with exit option after fifth year to be exercised on the interest payment dates.
• The minimum permissible amount allowed for investment in SGB is one gram of gold. The maximum limit of the subscription is four kilograms for individuals and HUFs, and 20 kilograms for trusts and similar entities per fiscal year (April-March), which is notified by the government from time to time.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign gold bonds 2020: Subscribers can avail of tax benefits. Should you buy?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government opened a five-day subscription window for the latest tranche of sovereign gold bonds (SGBs) from January 13. The certificate of these bonds will be issued on January 21, 2020.

Online subscribers can secure these bonds at a discount of Rs 50 per gram. They will cough up Rs 3,966 a gram if they pay digitally. Others have to pay Rs 4,016 a gram.

The nominal value of the latest tranche offering of these bond 2019-20 Series VIII has been fixed on the basis of simple average of closing price for gold of 999 purity of the past three business days preceding the subscription period (January 08-10, 2020). This data, published by the India Bullion and Jewellers Association Ltd (IBJA), works out to Rs 4,016 a gram.

HDFC Securities, a brokerage, said investors must see SGBs more as a tool to diversify assets rather than an instrument to earn superior returns.

Their reason? “Although investors in some of the past tranches are currently traded in the negative, one needs to appreciate that gold prices are prone to fluctuations based on macro events globally and US dollar-rupee rates,” said HDFC Securities in a note on Tuesday.

The brokerage advised investors who are underinvested in gold or have regular fresh monies for allocation in various asset classes or need to accumulate gold for wedding or other auspicious occasions to choose a systematic investment plan (SIP) in every tranche of gold.

Jitendra Solanki, a Sebi-registered investment expert, said gold bonds are a good option for retail investors and better than physical gold.

“Every investor should allocate 6 to 10 percent of their portfolio to gold as the yellow metal works as a hedge. Benefits such as regular interest income, capital gain tax exemption (on maturity), sovereign guarantee, and liquidity and appreciation value make gold bonds attractive investment option.”

Anuj Gupta, deputy vice-president — Commodities and Currencies at Angel Broking, said investors should keep a certain portion of their investment in gold because the metal can hedge against uncertainty and has always given good return in the long run.

Here are the vital benefits of sovereign gold bonds (SGB) 2019-20:
Guarantee: SGBs hold a sovereign guarantee, hence there is no default risk involved.

Discount: The issue price of the gold bond has been fixed at Rs 50 discount on nominal value for per gram for digital applications. HDFC Securities said that this discount will help investors get slightly higher returns over buying gold from the spot market.

Returns: SGBs deliver two streams of returns. One, regular interest of 2.50 per annum on invested capital every six months and two, capital gains at the time of redemption in case the price at the time of redemption is higher. Interest will be credited to the bank account of an investor in every six months.

Collateral: SGBs can be used as collateral for loans. This bond is as liquid as physical gold and could be exchanged for money at the time of financial need. These bonds will be available both in demat and paper form.

In Union budget 2016, then finance minister Arun Jaitley provided capital gains tax exemption on redemption on such bonds. Indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

Who can buy gold bonds:
Residents of India, individuals, HUFs, trusts, universities, charitable institutions and minors can apply for sovereign gold bonds. For children account, guardians have to apply.

The investors can buy minimum of 1 gram and maximum of 4kg (individuals/HUFs). However, trusts can buy up to 20 kg in a financial year (April-March).

Holding period for gold bonds:
The tenure of the bonds will be for a period of eight years with an exit option after 5th year of the date of issue.

Redemption price:
Gold bonds will be redeemed for cash at the end of the investment tenure. Redemption will take place at the prevailing gold price based on simple average of closing price of gold of 999 purity of previous three business days from the date of repayment.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sovereign Gold Bond scheme Series IV: RBI fixes price at Rs 3,890 per gram

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Sovereign Gold Bond Scheme 2019-20-Series IV will be opened for subscription from September 9. SGBs are government securities denominated in grams of gold and they are issued by the Reserve Bank of India. The sovereign gold bond scheme was launched in November 2015 with the objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of the yellow metal, into financial savings. Moreover, the capital gains tax arising on the redemption of SGB to an individual has been exempted. Here are the key things to know about the scheme:

* The RBI has set the price of the next tranche of the sovereign gold bond issue at Rs 3,890 per gram.

* The issue will open for subscription on September 9 and will close on September 13.

* The government has decided to offer a discount of Rs 50 per gram for those investors applying online and making payment for the purchase of the bond through digital mode.

* Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. The minimum investment in the bonds is one gram with a maximum limit of subscription of 500 gram per person per fiscal year (April-March).

* The maximum limit of subscription is 4 kg for individual and Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities per fiscal.

* The application form will be provided by the issuing banks/SHCIL offices/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facility.

With inputs from agencies

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow