A sovereign gold bond is a government bond issued by the Reserve Bank of India. It is possible to convert it to demat form. SGBs are opening for public subscription on June 20 and will remain open till Friday June 24. This is the first tranche of the SGB scheme for the financial year 2022-23. The second tranche will be opened during August 22-August 26. Its worth is measured in gold weight. For purchase, the issue price must be paid to a SEBI-certified broker. The money from the bond sale is placed into the investor’s account.
How to convert SGBs to demat
Physical SGBs bought through a bank or other financial intermediary can be converted to Demat form by submitting the dematerialisation request to the issuer banker or financial intermediary. The bank/intermediary will upload the data in the e-Kuber portal of RBI to process your request.
sovereign gold bond: benefits
Hassle free: Ownership of gold without any physical possession (No risks and no cost of storage)
Tax treatment: 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.
Tradability: Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
Transferability: Bonds shall be transferable by execution of an Instrument of transfer in accordance with the provisions of the Government Securities Act.
sovereign gold bond: features
Eligibility: The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions. For online application through ICICI Bank, the bonds are for sale to only ‘individuals’ through the Internet Banking Channel and iMobile App. Customers falling into other category of investors may however approach the branch and fill-up the application form to apply for the tranche.
Denomination: The bonds will be denominated in units of one gram of Gold and multiples thereof.
Minimum size: Minimum permissible investment will be 1 gram of Gold.
Maximum limit: Maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time
Interest rate: The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually.
Tenor: The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates.
Redemption: Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of
repayment, published by the India Bullion and Jewelers Association Limited.
