Sovereign Gold Bond Scheme Opens Today: Price, Discount, Interest, Key Things to Know

The second tranche of Sovereign Gold Bond (SGB) of the Reserve Bank of India (RBI) has opened today, August 22. The sovereign gold bond issue price has been fixed at Rs 5,197 per gram, as per a notification by the central bank. The second tranche of the RBI sovereign gold bond scheme will remain open till August 26, Friday.

Here are Key Things to Know About RBI Sovereign Gold Bond Scheme:

Sovereign Gold Bond Price and Discount

“The nominal value of the 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 (Rupees Five thousand one hundred and ninety seven only) per gram of gold,” the reserve bank said in a press release dated Friday.

There is a discount of Rs 50 for those who apply for the SGB online and choose a digital mode of payment. “Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs 5,147 (Rupees Five thousand one hundred and forty seven only) per gram of gold,” as per the Reserve Bank.

Who Can Invest?

Investors who are eligible to participate in the SGB tranche include trusts, universities, charitable trusts, and Hindu Undivided Families (HUFs). In addition, a resident of India, as defined under Foreign Exchange Management Act of 1999, is eligible to invest. In case of a resident change to outside the country, the person can hold SGBs till early maturity.

Sovereign Gold Bond Scheme Interest

The interest on the bonds is fixed at 2.50 per cent per annum. The interest will be credited semi-annually to the bank account of the investor and last interest will be paid on maturity along with the principal. According to the Income Tax Act, 1961 (43 of 1961), the interest is taxable. There will be no capital gains tax on redemption of the sovereign gold bonds.

Sovereign Gold Bond 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 HUFs, this limit is capped at 4 kilograms.

What Are Sovereign Gold Bonds?

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

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