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Govt Issues Sovereign Gold Bond Scheme 2016-2017 – All Details

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Govt Issues Sovereign Gold Bond Scheme 2016-2017, Check Sovereign gold scheme Complete Details. Interest Rate Under Sovereign Gold Bond Scheme 2016. Here we are providing Complete details for Sovereign Gold Bond Scheme. In this article you can find everything you want to know about Sovereign Gold Bond Scheme like – What is Sovereign Gold Bonds, Features of Sovereign Gold Bond Scheme, Rate of return in the form of interest, Eligibility for Sovereign Gold Bond Scheme, Determination of price, Tax treatment etc. Recently we provide Complete details for Dormant Company. Now you can scroll down below and check complete details regarding “Govt Issues Sovereign Gold Bond Scheme 2016-2017 – All Details

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Govt Issues Sovereign Gold Bond Scheme 2016-2017

Sovereign Gold Bond Scheme - Draft Guidelines

Government of India decide to issue Sovereign Gold Bond Scheme 2016-2017 Series 3rd. Applications for the bond to be accepted from October 24, 2016 to November 02, 2016 and the Bonds will be issued on November 17, 2016. 

What is Sovereign Gold Bonds :

These are bonds issued on payment of money and are linked to price of gold which earns you additional income.

One of the main objectives of this scheme is that government is targeting those who are investing in gold by purchasing gold coins or bars and not those who are buying jewellery for consumption. They carry a specified interest rate which is to be finalized by government of India yet..! But as per the source of information available the interest may be not more than 2.50% pa. But the attractive side of this scheme is its maturity value, i.e gain at the time of sale in the form of appreciation of its price.

Objectives :

Main objectives of the government behind introduction of this scheme :

(1) The main idea is to reduce the demand for physical gold.

(2) Shift part of the estimated 300 tons of physical bars and coins purchased every year for Investment into ‘demat’ gold bonds.

Features of Sovereign Gold Bond Scheme 2016-2017:

S. No. Item Details
1 Product name Sovereign Gold Bond 2016-17 – Series III
2 Issuance To be issued by Reserve Bank India on behalf of the Government of India.
3 Eligibility The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4 Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
6 Minimum size Minimum permissible investment will be 1 grams of gold.
7 Maximum limit The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
8 Joint holder In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
9 Issue price Price 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 week (Monday to Friday) preceding the subscription period. The issue price of the Gold Bonds will be ` 50 per gram less than the nominal value.
10 Payment option Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
11 Issuance form Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate. The Bonds are eligible for conversion into demat form.
12 Redemption price The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
13 Sales channel Bonds 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.
14 Interest rate The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value of investment.
15 Collateral Bonds 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.
16 KYC Documentation Know-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.
17 Tax treatment The 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
18 Tradability Bonds will be tradable on stock exchanges/NDS-OM from a date to be notified by RBI.
19 SLR eligibility The Bonds will be eligible for Statutory Liquidity Ratio purposes.
20 Commission Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received  by  the  receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.
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