What is Sovereign Gold Bond Scheme?

Sovereign Gold Bond Scheme: The second tranche of the Sovereign Gold Bond Scheme of the Reserve Bank of India (RBI) opened on August 22, 2022. The issue price of the Sovereign Gold Bond has been fixed at Rs. 5,197 per gram, according to the notification issued by the Reserve Bank of India. The second tranche of the Sovereign Gold Bond Scheme will remain open till August 26, 2022. Sovereign Gold Bond Scheme is issued by the RBI on behalf of the Central Government of India and they are sold through the banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges- NSE and BSE.

Don't miss out on this golden opportunity! SOVEREIGN GOLD BONDS SCHEME 2022-23 SERIES – II opens from 22 Aug to 26 Aug.
Know more: https://t.co/toePwigMVj
#SovereignGoldBond #AzadiKaAmritMahotsavWithSBI #SBI pic.twitter.com/t0HLSV2eqg

— State Bank of India (@TheOfficialSBI) August 20, 2022

What are Sovereign Gold Bond?

Sovereign Gold Bonds are the Government securities that are issued by the Reserve Bank of India that act as a substitute for physical gold. These Sovereign Gold Bonds are denominated in grams and are issued several times a year. Every series of these bonds has an issue price that is regulated by the apex financial institution. One can also buy or sell the Sovereign Gold Bonds during the series or can transact in a secondary market.

Sovereign Gold Bond Scheme Price and Discount

The Reserve Bank of India announced that the nominal value of the Sovereign Gold Bond based on the simple average closing price (published by the India Bullion and Jewellers Association Ltd (IBJA)) for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. August 17, August 18, and August 19, 2022 works out to Rs. 5,197 per gram of gold.

There is a discount of Rs. 50 for those who apply for the Sovereign Gold Bond online and choose a digital mode of payment. As per the Reserve Bank of India, for such investors, the issue price of Gold Bond will be Rs. 5,147 per gram of gold.

Who can invest in Sovereign Gold Bond scheme?

The investors who are eligible to participate in the Sovereign Gold Bond tranche include universities, trusts, charitable trusts, and Hindu Undivided Families. In addition, a resident of India, as defined under the Foreign Exchange Management Act of 1999, is also eligible to invest in Sovereign Gold Bond Scheme. In case there is a residential change outside the country, the person can hold the bonds till early maturity.

Sovereign Gold Bond Scheme interest

The interest on the Sovereign Gold Bond is fixed at 2.50 percent per annum. The interest will be credited semi-annually to the bank account of the investor and the last interest will be paid on the maturity along with the principal.

As per the Income Tax Act, 1961, the interest is taxable. There will be no capital gains tax on the redemption of the sovereign gold bonds.

What is the Sovereign Gold Bond Scheme Investment limit?

Sovereign Gold Bonds are issued for a minimum of one gram of gold. The maximum limit differs for who the investor is. Entities such as trusts and universities have an upper limit of 20 kilograms. For individuals and Hindu Divided Families, this limit is capped at 4 kilograms.