Sovereign Gold Bond Scheme - Rating & Review - Best Scheme for Gold

Sovereign Gold Bond Scheme – Rating & Review – Best Scheme for Gold

Roboadviso     Mutual Funds Rating     Posted On, Tue 17th October, 2017     No comments
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Government of India has announced the launch of 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 of the Bonds shall are as follows:

1. Eligibility for Investment:
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.

2. Form of Security
The investors will be issued a Holding Certificate (Form C). The Bonds shall be eligible for conversion into de-mat form.

3. Date of Issue
The bond shall be issued on the first business day of next week for the applications received during a given week.

4. Denomination
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.

5. Issue Price
Price of the Bonds shall 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 Jewelers Association Limited for the last three business days of the week preceding the subscription period. The issue price of the Gold Bonds will be Rs. 50 per gram less than the nominal value to those investors applying online and the payment against the application is paid through digital mode.

6. Interest
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.

7. Payment Options
Payment shall be accepted in Indian Rupees through cash up to a maximum of Rs. 20,000/- or Demand Drafts or Cheque or Electronic banking.

8. Redemption
i) 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.

ii) 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.

9. Loan against Bonds
The Bonds may be used as collateral for loans. The Loan to Value ratio will be as applicable to ordinary gold loan mandated by the RBI from time to time.

10. Tax Treatment
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.

Recommendation:
If you want to invest in Gold because of the positive future outlook or for some family goals like marriage of children etc. then take advantage of Sovereign Gold Bond Scheme which is being offered by Government of India. The Bond has an added advantage of 2.5% of interest per annum and exemption on capital gain tax which is not available with any other form of Gold. There is no management fees and expenses related to security and holding charges. Paper Gold Bond gives 100% quality assurance and minimum management hassle.

If Gold is in you mind then go for Sovereign Gold Bond Scheme.

Pros

2.5% Interest Per Annum
No Capital Gain Tax
No Management Fees
Discount of Rs. 50 per gram
No Holding Cost & Physical Management
High purity of Gold Assured

Cons

None

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