If you are looking for an economical way invest in gold, then you may be interested in Sovereign Gold Bond Scheme. The fourth tranche of Sovereign Gold Bonds 2021-22 opened for subscription on July 12 for five days. The central bank has fixed the issue price at Rs 4,807 per gram. The Sovereign Gold Bonds introduced in 2015 were aimed at changing the perspective of buying gold for financial investment. Yogesh Kalwani, Head of Investments, Incred Wealth, said, “Gold bonds or gold funds or gold ETFs all three are the best way to invest in gold as all carry minimal risk and are very cost-effective.”
“Investment in Sovereign Gold Bonds is a better alternative to physical gold. Investors will save on the cost of buying, holding and selling physical gold bars or coins, said Nish Bhatt, Founder and CEO, Millwood Cane International.
Know the salient features of the fourth tranche of Sovereign Gold Bond Scheme 2021-22
1) Resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions are eligible to apply for membership of the bond.
2) The Reserve Bank of India fixed the issue price at Rs 4,807 per gram. The issue price of the Gold Bond is arrived at by the simple average of the closing price of gold of 999 purity published by India Bullion and Jewelers Association Limited for the last three business days of the week preceding the subscription period.
3) Individuals can buy gold bonds directly or through agents from commercial banks, Stock Holding Corporation of India Limited (SHCIL), RBI designated post offices and recognized stock exchanges.
4) Bonds are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in gold bonds will be one gram with a maximum limit of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities. In case of joint holding, the limit applies to the first applicant, clarified the central bank.
5) A customer can apply online through the website of empaneled scheduled commercial banks. The issue price of gold bonds will be Rs 50 per gram less than the nominal value for investors applying online and payment against the application is made through digital mode.
6) The interest on the bond has been fixed at 2.50% p.a. The interest will be credited to the investor’s bank account semi-annually and the final interest will be paid on maturity along with the principal. As per the Income Tax Act, 1961 (43 of 1961), interest is taxable. No capital gains tax will be levied on the redemption of Sovereign Gold Bonds.
7) The term of the bond is eight years. RBI said that both the interest and the redemption proceeds will be credited to the bank account presented by the customer at the time of buying the bond. Banks allow early redemption or redemption of bonds after the fifth year from the date of issue on coupon payment dates.
8) The bond shall be tradable on the exchanges when held in demat form. A specific request for the same should be made in the application form itself. It can also be transferred to any other eligible investor. These securities are also eligible to be used as collateral for loans from banks, financial institutions and non-banking financial companies (NBFCs).
9) It is advisable to invest in sovereign gold bond schemes or ETFs or any other platform available like digital gold,” said Navneet Damani, VP, Commodity Research, Motilal Oswal Financial Services.
10) If the customer fulfills the eligibility criteria, presents a valid identity document and submits the application amount on time, he/she will receive the allotment, the bank said.
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