Sovereign Gold Bond Scheme 2018 -19

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Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds-2018-19. 

The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The features of the Bond are given below:

Sl. No.ItemDetails
1Product nameSovereign Gold Bond 2018-19.
2IssuanceTo be issued by Reserve Bank India on behalf of the Government of India.
3EligibilityThe Bonds will be restricted for sale to resident entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4DenominationThe Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5TenorThe tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th year and 7th year to be exercised on the interest payment dates.
6Minimum sizeMinimum permissible investment will be 1 gram of gold.
7Maximum limitThe maximum limit of subscribed shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bondssubscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
8Joint holderIn case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
9Issue pricePrice 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 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be `50 per gram less for those who subscribe online and pay through digital mode.
10Payment optionPayment for the Bonds will be through cash payment (up to a maximum of `20,000) or demand draft or cheque or electronic banking.
11Issuance formThe Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12Redemption priceThe redemption price will be in Indian Rupees based on previous 3 working dayssimple average of closing price of gold of 999 purity published by IBJA.
13Sales channelBonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14Interest rateThe investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.
15CollateralBonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time. The lien on the bonds shall be marked by the depositary by the authorized banks. The loan against SGBs would be subject to decision of the lending bank/institution and cannot be inferred as a matter of right by the SGB holder.
16KYC documentationKnow-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to the investor(s).
17Tax treatmentThe interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 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.
18TradabilityBonds will be tradable on stock exchanges within a fortnight of the issuance on a date, as notified by the RBI.
19SLR eligibilityBonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.
20CommissionCommission for distribution of the bond shall be paid at the rate Rupee one per hundred Rupees the total subscription received by the receiving offices and receiving offices shall share at least paise 50 per hundred Rupees of the commission so received with the agents or sub agents for the business procured through them.