It has been decided by Govt. of India to launch Sovereign Gold Bond Scheme. Under the scheme SGBs (The Bonds) will be issued in a series of weekly issuances which will be open for subscription from Monday to Wednesday of every week starting from October 09, 2017. The terms and conditions of the issuance and the salient features of the Bonds are as under:
The Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual. The bond may also be held by a Trust, Charitable Institution and University. “Person resident in India” is defined under section 2(v) read with section 2(u) of the Foreign Exchange Management Act, 1999.
The Bonds shall be issued in the form of Government of India Stock in accordance with section 3 of the Government Securities Act, 2006. The investors will be issued a Holding Certificate Form C (129 KB). The Bonds shall be eligible for conversion into de-mat form.
The bond shall be issued on the first business day of next week for the applications received during a given week.
The Sovereign Gold Bonds will be issued every week from October 2017 to December 2017 as per the calendar specified below:
The Bonds shall be denominated in units of one gram of gold and multiples thereof. Minimum investment in the Bonds shall be one gram with a 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), provided that:
For the subscription period from December 26, 2017 to December 27, 2017 with settlement on January 01, 2018, the nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewelers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period, i.e. December 20 to December 22, 2017 works out to Rs. 2881/-(Rupees Two thousand Eight Hundred and Eighty One only) - per gram.
The Bonds shall bear interest at the rate of 2.50 percent (fixed rate) per annum on the amount of initial investment. Interest shall be paid in half-yearly rests and the last interest shall be payable on maturity along with the principal.
Presently, the Payment shall be accepted in Indian Rupees through Transfer Cheque only.
The Bonds shall be repayable on the expiration of eight years from the date of issue of Gold bonds. Pre-mature redemption of the Bond is permitted from fifth year of the date of issue on the interest payment dates.
The redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. The receiving office shall inform the investor of the date of maturity of the Gold Bond one month before its maturity.
RBI/depository shall inform the investor of the date of maturity of the Bond one month before its maturity.
Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Subscription for the Bonds may be made in the prescribed application form Form A (105 KB) or in any other form as near as thereto stating clearly the grams of gold and the full name and address of the applicant. The receiving office shall issue an acknowledgment receipt in Form B (13 KB) to the applicant.
Application forms from investors will be received at branches during normal banking hours from Monday to Wednesday of every week (both days inclusive). Branches need to ensure that the application is complete in all respects as incomplete applications are liable to be rejected. Relevant additional details may be obtained from the applicants, where necessary. The Branches may make arrangements to enable the investors to apply online, in the interest of better customer service.
Nomination and its cancellation shall be made in Form D and Form E (60 KB), respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.
Multiple joint holders and nominees (of first holder) are permitted. Necessary details may be obtained from the applicants as per practice.
In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
The Bonds shall be transferable by execution of an Instrument of transfer as in Form F (16 KB), in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated December 1, 2007.
The Bonds shall be eligible for trading on a date notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges)
Know-Your-Customer (KYC) norms shall be the same as that for purchase of physical form of gold. Identification documents such as passport, Permanent Account Number (PAN) Card, Voter's Identity Card, Aadhaar card shall be required. In case of minors only, the bank account number may also be considered as valid for KYC verification. KYC will be done by the issuing banks/SHCIL offices/Post Offices/agents. It may be ascertained from the investor, if he/she has made a previous investment in SGBs or IINSC-C and hence in possession of an Investor ID. If so, the investments may be made under the unique Investor ID only.
Cancellation of application is permitted till the closure of the issue, i.e. until Wednesday of the particular week of subscription. Part cancellation of submitted request for purchase of gold bonds is not permitted. No interest on application money needs to be paid if the application is cancelled.
Holding Certificate needs to be printed in colour on A4 size 100 GSM paper.
All Branches in India are authorized to issue Bonds.
*- Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the last 3 business days of the week preceding the subscription period.