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4th Tranche of Sovereign Gold Bonds Public Issue Opens

Public Issue of the Sovereign Gold Bonds is now open. This is the fourth tranche, announced by the Reserve Bank of India in consultation with the Government of India.

As you are aware, this is the initiative by the Finance Minister to encourage people to switch from "physical" to "financial" gold. The aim is to reduce dependence on imported gold, thereby bringing down India's Current Account deficit. Thus, investors have a viable alternative, without jeopardizing India's economic fundamentals.

Salient features of the current issue are listed below.

Eligibility: Only for the resident Indian entities (individuals, HUFs, trusts, universities, charitable institutions, etc.)

Application acceptance dates: July 18 to 22, 2016 (Bonds will be issued on August 5, 2016)

Pricing: Rs.3119 per gram of gold
[Based on the previous week’s (i.e. July 11 - 15) average of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd. (IBJA)]

Interest rate: 2.75% payable semi-annually on the initial value of investment

Investment limit: Minimum 1 gram and Maximum 500 grams per person per financial year (based on self-declaration)

Tenor: 8 year bonds (with an early exit option from 5th year, on the interest payment dates)


gold-bond-scores-over-jewellery
Say no to Physical Jewellery. Bond with the Financial Sovereign Gold Bond.

Where to buy: Banks, Designated Post Offices, NSE / BSE and Stock Holding Corporation of India Ltd. (directly or thru' agents)

Denomination: In multiples of gram(s) of gold with a basic unit of 1 gram

Payment: DD, Cheque or Electronic Banking (including cash up to Rs.20,000)

Form: Govt. of India Stock Certificate. Can also be converted into demat form. 

Joint holding: Permitted (maximum limit applies to the first applicant only)

Redemption pricing: Based on the previous week’s (Mon to Fri) average of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd. (IBJA)

Taxation
(a) Interest taxable as per IT Act 
(b) Capital Gains on redemption is exempt from tax 
(c) Capital Gains on transfer is eligible for indexation benefit if holding period exceeds 3 years.

Collateral: Allowed as collateral for loans; with same Loan-to-Value ratio as physical gold

KYC:  Voter ID, Aadhaar card/PAN or TAN /Passport i.e. same as for purchase of physical gold

Liquidity: Would be traded on exchanges

Commission: Distributors shall be paid 1% of the subscription amount


As mentioned in the past
... Don't "invest" in physical gold
... Bonds give you EXTRA interest income that jewellery, bars or coins don't
... They are lot safer than physical gold
... No risk of impurity and no (wasteful) making charges
... Buying bonds reduce import of gold; which benefit both the economy and you
... Don't go overboard with your investment in gold; there are better investments that you mustn't ignore.

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