The Central Govt., together with Reserve Bank of India, has announced the entire calender for the Public Issues of Sovereign Gold Bonds during the current Financial Year 2018-19.
There is one public issue every month – designated as Series II to VI – beginning from Oct 2018 to Feb 2019 (Series I was issued in April 2018).
Salient features of the same detailed below:
Product Name: Sovereign Gold Bond 2018-19 – Series II to IV.
Eligible Investors: Only for the resident Indian entities (individuals - singly, jointly or on behalf of minor, HUFs, trusts, universities, charitable institutions, etc.)
Application acceptance dates:
1. 2018-19 Series II : Oct 15-19, 2018 (Bonds to be issued on Oct 23, 2018)
2. 2018-19 Series III : Nov 05-09, 2018 (Bonds to be issued on Nov 13, 2018)
3. 2018-19 Series IV : Dec 24-28, 2018 (Bonds to be issued on Jan 1, 2019)
4. 2018-19 Series V : Jan 14-18, 2019 (Bonds to be issued on Jan 22, 2019)
5. 2018-19 Series VI : Feb 04-08, 2019 (Bonds to be issued on Feb 12, 2019)
(Note: The Central Government may close the Scheme at any time before the period specified above with prior notice.)
Pricing Formula: Nominal Value based on the simple average closing price of gold — of 999 purity — as per India Bullion and Jewellers Association Ltd. (IBJA), during the last three business days of the previous week.
Important: For investors applying online and paying through the digital mode, the net price applicable will be after considering a discount of Rs.50 on the nominal value.
Interest rate: @2.50% p.a. (payable semi-annually) on the initial value of your investment
Investment limit (per financial year): Minimum 1 gram. The Maximum limit is 4 kgs for individuals / HUFs, and 20 kgs for trusts etc. This is based on self-declaration and includes bonds purchased under different series, tranches and also the Secondary Market.
Tenor: These bonds mature after eight years from the date of issue (with an early exit option from the 5th year onward, on the interest payment dates only).
Where to buy: Scheduled Commercial Banks, Designated Post Offices, National Stock Exchange of India / Bombay Stock Exchange and Stock Holding Corporation of India (either directly or thru' agents)
Issuer: Reserve Bank of India on behalf of the Government of India
Denomination: In multiples of gram(s) of gold, with a basic unit of 1 gram
Mode of Payment: Demand Draft, Cheque or Electronic Banking (and also Cash, up to Rs.20,000 only)
Form: Govt. of India Stock Certificate. Can also be converted into demat form.
Joint holding: Permitted (maximum investment limit of 4 kgs applies to the first applicant only)
Redemption pricing: Based on the simple average closing price of gold, of 999 purity, during the last three business days of the previous week, as per India Bullion and Jewellers Association Ltd. (IBJA)
Taxation:
a. Interest income is taxable as per IT Act
b. Capital Gains on redemption (when the Bonds are held till maturity) is exempt from tax (only for individual investors)
c. Capital Gains on transfer (when the Bonds are sold in the secondary market) is eligible for indexation benefit, if the holding period exceeds 3 years.
Collateral: Allowed as collateral for loans; with the same Loan-to-Value ratio as mandated by RBI on the physical gold. This, however, is subject to the decision of bank or financing agency and not a matter of right for the bondholder.
Nomination: Permitted. (If the nominee is an NRI, s/he will have to hold the bonds till maturity and the maturity proceeds including interest will be non-repatriable.)
Transferability / Trading: Permitted
Liquidity: Would be traded on the stock exchanges.
KYC: Voter ID, Aadhaar card / PAN or TAN / Passport i.e. same as for purchase of physical gold
Commission: 1% of the subscription amount shall be paid to the receiving offices, who shall share at least 50% of the same with the agents procuring the business.
And, of course, MY STATUTORY WARNING
a. The best option for "investing" in gold is undoubtedly the Sovereign Gold Bond.
b. As an alternative, you can also consider Gold ETF (Exchange Traded Fund).
c. However, gold jewellery as an investment is an absolute blunder.
d. On the parameters Price, Purity and Protection, Sovereign Gold Bonds and Gold ETFs are far (far) superior to jewellery.
e. Now pay 3% GST on physical gold (+5% GST on making charges); none on Gold Bonds
f. Due to Govt's nepotism, Sovereign Gold Bonds are a better choice as compared to Gold ETFs.
g. As many financial advisors (including me) have often warned, invest only a token amount in gold. Don't let your portfolio become too heavy on gold (and property).
h. Leave 'ample' room for financial assets (more particularly the mutual funds).
There is one public issue every month – designated as Series II to VI – beginning from Oct 2018 to Feb 2019 (Series I was issued in April 2018).
Salient features of the same detailed below:
Product Name: Sovereign Gold Bond 2018-19 – Series II to IV.
Eligible Investors: Only for the resident Indian entities (individuals - singly, jointly or on behalf of minor, HUFs, trusts, universities, charitable institutions, etc.)
Application acceptance dates:
1. 2018-19 Series II : Oct 15-19, 2018 (Bonds to be issued on Oct 23, 2018)
2. 2018-19 Series III : Nov 05-09, 2018 (Bonds to be issued on Nov 13, 2018)
3. 2018-19 Series IV : Dec 24-28, 2018 (Bonds to be issued on Jan 1, 2019)
4. 2018-19 Series V : Jan 14-18, 2019 (Bonds to be issued on Jan 22, 2019)
5. 2018-19 Series VI : Feb 04-08, 2019 (Bonds to be issued on Feb 12, 2019)
(Note: The Central Government may close the Scheme at any time before the period specified above with prior notice.)
Pricing Formula: Nominal Value based on the simple average closing price of gold — of 999 purity — as per India Bullion and Jewellers Association Ltd. (IBJA), during the last three business days of the previous week.
Important: For investors applying online and paying through the digital mode, the net price applicable will be after considering a discount of Rs.50 on the nominal value.
Interest rate: @2.50% p.a. (payable semi-annually) on the initial value of your investment
Investment limit (per financial year): Minimum 1 gram. The Maximum limit is 4 kgs for individuals / HUFs, and 20 kgs for trusts etc. This is based on self-declaration and includes bonds purchased under different series, tranches and also the Secondary Market.
Tenor: These bonds mature after eight years from the date of issue (with an early exit option from the 5th year onward, on the interest payment dates only).
Where to buy: Scheduled Commercial Banks, Designated Post Offices, National Stock Exchange of India / Bombay Stock Exchange and Stock Holding Corporation of India (either directly or thru' agents)
Issuer: Reserve Bank of India on behalf of the Government of India
Denomination: In multiples of gram(s) of gold, with a basic unit of 1 gram
Mode of Payment: Demand Draft, Cheque or Electronic Banking (and also Cash, up to Rs.20,000 only)
Form: Govt. of India Stock Certificate. Can also be converted into demat form.
Joint holding: Permitted (maximum investment limit of 4 kgs applies to the first applicant only)
Redemption pricing: Based on the simple average closing price of gold, of 999 purity, during the last three business days of the previous week, as per India Bullion and Jewellers Association Ltd. (IBJA)
Taxation:
a. Interest income is taxable as per IT Act
b. Capital Gains on redemption (when the Bonds are held till maturity) is exempt from tax (only for individual investors)
c. Capital Gains on transfer (when the Bonds are sold in the secondary market) is eligible for indexation benefit, if the holding period exceeds 3 years.
Collateral: Allowed as collateral for loans; with the same Loan-to-Value ratio as mandated by RBI on the physical gold. This, however, is subject to the decision of bank or financing agency and not a matter of right for the bondholder.
Nomination: Permitted. (If the nominee is an NRI, s/he will have to hold the bonds till maturity and the maturity proceeds including interest will be non-repatriable.)
Transferability / Trading: Permitted
Liquidity: Would be traded on the stock exchanges.
KYC: Voter ID, Aadhaar card / PAN or TAN / Passport i.e. same as for purchase of physical gold
Commission: 1% of the subscription amount shall be paid to the receiving offices, who shall share at least 50% of the same with the agents procuring the business.
And, of course, MY STATUTORY WARNING
a. The best option for "investing" in gold is undoubtedly the Sovereign Gold Bond.
b. As an alternative, you can also consider Gold ETF (Exchange Traded Fund).
c. However, gold jewellery as an investment is an absolute blunder.
d. On the parameters Price, Purity and Protection, Sovereign Gold Bonds and Gold ETFs are far (far) superior to jewellery.
e. Now pay 3% GST on physical gold (+5% GST on making charges); none on Gold Bonds
f. Due to Govt's nepotism, Sovereign Gold Bonds are a better choice as compared to Gold ETFs.
g. As many financial advisors (including me) have often warned, invest only a token amount in gold. Don't let your portfolio become too heavy on gold (and property).
h. Leave 'ample' room for financial assets (more particularly the mutual funds).
