Sovereign Gold Bonds Scheme.

## What is Sovereign Gold Bond (SGB)?
– SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

• The SGB offers a superior alternative to holding gold in physical form.

– Tag line: Invest Wisely. Earn safely.

## Who is the issuer?
The Bond is issued by Reserve Bank on behalf of Government of India.

– Who is eligible to invest:

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc.

## What are the Features?
– The Sovereign Gold Bonds will be available both in DEMAT and paper form.

– The tenor of the bond is for a minimum of 8 years with an option to exit in 5th, 6th and 7th years.

– Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 2 grams. The bonds can be bought by Indian residents or entities and is capped at500 grams.

– The Bonds bear interest at the rate of 2.75 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

– They will carry sovereign guarantee both on the capital invested and the interest.

– Bonds can be used as collateral for loans.

– Bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.

– There is no bar on investment by banks in Sovereign Gold Bonds. These will qualify for SLR.

– The bonds can be held in Demat account.

– Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.

– Joint holding is allowed.

– Minors can also invest in SGB.

– The application form will be provided by the issuing banks/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facility.

– Investors can apply for the bonds through scheduled commercial banks and designated post offices. NBFCs, National Saving Certificate (NSC) agents and others, can act as agents. They would be authorised to collect the application form and submit in banks and post offices.

– Know-Your-Customer (KYC) norms will be the same as that for the purchase of the physical form of gold. Identification documents such as Aadhaar card/PAN or TAN /Passport / Voter ID card will be required.

– In Sovereign Gold Bonds, capital gains tax treatment will be the same as for physical gold for an ‘individual’ investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.

– TDS(Tax deducted at source) is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

– Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form.

– Investors will get returns that are linked to gold price, the scheme is expected to offer the same benefits as physical gold.

– They can be used as collateral for loans and can be sold or traded on stock exchanges.

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