New Sovereign Gold Bond issues announced for December and February – FAQs answered

New sovereign gold bonds (Sovereign Gold Bond Scheme 2023-24) have been announced by the Indian government in two parts, scheduled for December and February. The subscription period for the new SGB Series III will be from December 18 to 22, while Series IV will be available from February 12 to 16, according to an ET report.
The objective of the sovereign gold bond scheme, launched in November 2015, is to reduce the demand for physical gold and encourage individuals to invest their savings in financial savings.
Sovereign Gold Bond Scheme 2023-24: FAQs Answered
Here are eight key points about the new Sovereign Gold Bond Scheme 2023-24 issuance:
1) Where can you buy sovereign gold bonds?
Sovereign gold bonds can be purchased through scheduled commercial banks, Stock Holding Corporation of India (SHCIL), Clearing Corporation of India (CCIL), designated post offices, and stock exchanges.
2) Who is eligible to buy these bonds?
SGBs can be bought by resident individuals, HUFs (Hindu Undivided Families), Trusts, Universities, and Charitable Institutions.
3) Features of the bond
The bonds will be denominated in grams of gold, with a minimum unit of one gram. The tenure of the bonds will be 8 years, with the option to redeem them prematurely after the 5th year, on the interest payment date.
4) Minimum and Maximum investment limits
The minimum investment allowed is one gram of gold. Individuals can subscribe for a maximum of 4 kg, HUFs can invest up to 4 kg, and trusts and similar entities can subscribe for up to 20 kg per fiscal year (April-March), as notified by the government. In the case of joint holdings, the 4 kg investment limit will apply to the first applicant only.

5) Issue price
The price of the gold bonds will be in Indian Rupees, based on the average closing price of gold (999 purity) published by the India Bullion and Jewellers Association (IBJA) for the three working days prior to the subscription period. Investors who subscribe online and pay through digital modes will get a discount of Rs 50 per gram on the issue price.
6) Payment options
Investors can make payments for the sovereign gold bonds through cash (up to a maximum of Rs 20,000), demand draft, cheque, or electronic banking.
7) Interest rate
The bonds will offer a fixed annual interest rate of 2.5%, paid semi-annually on the nominal value. SGBs can also be used as collateral for loans, subject to the loan-to-value (LTV) ratio applicable to ordinary gold loans set by the Reserve Bank of India.
8) Tax treatment
The interest earned on sovereign gold bonds will be taxable as per the Income Tax Act, 1961. However, the capital gains tax on redemption of these bonds will be exempted for individuals. Long-term capital gains arising from the transfer of the gold bonds will be eligible for indexation benefits.