Sovereign gold bond scheme opens for subscription: 10 points

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The third tranche of Sovereign Gold Bond Scheme 2021-22 opened for subscription today. The issue price has been fixed at 4,889 per gram of gold and investors applying online and the making the payment in digital mode will get a discount of 50 per gram. For such investors, the issue price of gold bond will be 4,839 per gram of gold. Earlier, the government had announced to issue the Sovereign Gold Bond (SGB) in six tranches from May 2021 to September 2021.

Here are 10 things to know about Sovereign Gold Bond Scheme:

1) Minimum permissible investment is one gram of gold. The RBI issues the bonds on behalf of the Government of India.

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2) The issue prices of sovereign gold bonds is fixed 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.

3) Gold bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram. The tenor of the bond will be for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates.

4) “Investment in sovereign gold bond is a superior alternative to physical gold. Investment in SGB saves the cost of buying, storing, and selling the physical gold bar or coins,” said Nish Bhatt, Founder & CEO, Millwood Kane International – an Investment consulting firm.

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5) “Investment in Sovereign Gold Bond is picking up pace, as per data the Tranche-1 of SGB saw investment in excess of 2500 crore. The high interest was also due to lower prices of Gold which reflected in the subscription price for the SGB. The advice and aim of the government, that investment should move from physical to paper gold is picking up pace. The subscription figures for FY21 were impressive and FY22 is likely to mirror it,” he added.

7) A total of 25,702 crore has been raised through the SGB Scheme since its inception till end-March 2021. The RBI had issued 12 tranches of SGB for an aggregate amount of 16,049 crore (32.35 tonnes) during 2020-21.

8) Gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings — used for the purchase of gold — into financial savings.

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9) Gold bonds offer an annual interest rate of 2.50% to investors.

10) Capital gains on gold bonds, if any, at maturity is tax-free. This is an exclusive benefit available on gold bonds. (With Agency Inputs)

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