The Series VII Sovereign Gold Bonds (SGB) issued by the Government of India will open on October 12 until October 16. The settlement date of the issue is October 20.
The issue price of the bond during subscription is Rs 5,051 per gram. There is a Rs 50 discount per gram on subscribing online for the bond.
Sovereign Gold Bonds are issued by the Government of India and comprises of government securities denominated in gold. Investors are required to pay the issue price in cash and they get a holding certificate in return.
These bonds are restricted for sale to resident investors, Hindu undivided families (HUFs), trusts, universities and charitable institutions.
A fixed interest rate of 2.5 percent per annum is applicable on the bond, which is payable biannually. However, the interest income on these bonds is taxable as per the provisions of the Income Tax Act.
SGBs can be used as collateral for loans from banks, financial institutions and non-banking financial companies (NBFCs).
On the other hand, the capital gains tax arising on redemption of an SGB to another individual is exempted from tax liabilities. Long term capital gains come with indexation benefits, ie after adjusting inflation index.
An investor can choose to exit after the fifth year; however, the term of the bond is eight years.
First Published: Oct 9, 2020 9:07 PM IST
