Sovereign Gold Bond Scheme 2023-24

The Government of India Introduces Sovereign Gold Bond Scheme

The Sovereign Gold Bond Scheme 2023-24 introduced by the Government of India presents individuals and institutions with a secure and convenient opportunity to invest in gold. Explore its features, benefits, and eligibility requirements.

The Government of India, in partnership with the Reserve Bank of India (RBI), has recently announced the launch of the Sovereign Gold Bond Scheme 2023-24. This scheme aims to provide individuals, trusts, universities, and charitable institutions with an attractive investment opportunity in gold. The Sovereign Gold Bonds (SGBs) will be issued in multiple tranches, with specific subscription and issuance dates.

Tranche Details

1. Tranche: 2023-24 Series I
   • Date of Subscription: June 19 – June 23, 2023
   • Date of Issuance: June 27, 2023
2. Tranche: 2023-24 Series II
   • Date of Subscription: September 11 – September 15, 2023
   • Date of Issuance: September 20, 2023

Where to Buy Sovereign Gold Bonds

Sovereign Gold Bonds can be purchased through various authorized channels, including:

1. Scheduled Commercial Banks (excluding Small Finance Banks, Payment Banks, and Regional Rural Banks)
2. Stock Holding Corporation of India Limited (SHCIL)
3. Clearing Corporation of India Limited (CCIL)
4. Designated Post Offices
5. Recognized Stock Exchanges (National Stock Exchange of India Limited and Bombay Stock Exchange Limited)

Key Features of the Sovereign Gold Bond Scheme 2023-24

To better understand the Sovereign Gold Bond Scheme 2023-24, let’s explore its essential features:

1. Product Name: Sovereign Gold Bond Scheme 2023-24

2. Issuance:

The Reserve Bank of India will issue the Sovereign Gold Bonds on behalf of the Government of India.

3. Eligibility:

Resident individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions are eligible to invest in the SGBs.

4. Denomination:

SGBs will be denominated in grams of gold, with the basic unit being one gram.

5. Tenor:

The tenor of the SGB will be eight years, with the option of premature redemption after the 5th year, which can be exercised on the date when the interest is payable.

6. Minimum Investment:

The minimum investment in SGBs will be one gram of gold.

7. Maximum Subscription Limit:

The maximum limit for individual subscribers is 4 kg, while HUFs can subscribe up to 4 kg. Trusts and similar entities have a higher limit of 20 kg per fiscal year (April-March), as notified by the Government. Investors will need to provide a self-declaration regarding their subscription limits. The annual ceiling includes SGBs subscribed under different tranches and those purchased from the secondary market during the fiscal year.

8. Joint Holding:

In the case of joint holders, the investment limit of 4 kg will be applied to the first applicant only.

9. Issue Price:

The issue price of the SGBs will be fixed in Indian Rupees based on the simple average of the closing price of 999-purity gold, published by the India Bullion and Jewellers Association Limited (IBJA), during the three working days before the subscription period. Investors who subscribe online and pay through digital mode will receive a discount of ₹50 per gram on the issue price.

10. Payment Options:

Investors can make payments for SGBs in cash (up to a maximum of ₹20,000), demand draft, cheque, or electronic banking.

11. Issuance Form:

The SGBs will be issued as Government of India Stock under the Government Securities Act, 2006. Investors will receive a Certificate of Holding, and the bonds can be converted into demat form.

12. Redemption Price:

The redemption price of the SGBs will be in Indian Rupees, calculated based on the simple average of the closing price of 999-purity gold during the previous three working days, as published by IBJA Ltd.

13. Sales Channels:

SGBs will be available for purchase through Scheduled Commercial banks, SHCIL, CCIL, designated post offices, and recognized stock exchanges (National Stock Exchange of India Limited and Bombay Stock Exchange Limited), either directly or through agents.

14. Interest Rate:

Investors will receive a fixed interest rate of 2.50% per annum, payable semi-annually on the nominal value of the bonds.

15. Collateral:

SGBs can be used as collateral for loans, with the loan-to-value (LTV) ratio following the guidelines set for ordinary gold loans by the Reserve Bank of India.

16. KYC Documentation:

Investors will need to comply with the know-your-customer (KYC) norms applicable to the purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN, or Passport will be required. Additionally, individuals and entities must provide their ‘PAN Number’ issued by the Income Tax Department.

17. Tax Treatment:

The interest earned on SGBs will be taxable as per the provisions of the Income Tax Act, 1961 (43 of 1961). However, the capital gains tax on redemption of SGBs is exempted for individuals. Long-term capital gains arising from the transfer of SGBs will enjoy indexation benefits.

18. Tradability:

SGBs will be eligible for trading, providing investors with liquidity options.

19. SLR Eligibility:

Banks can count SGBs acquired through lien/hypothecation/pledge processes towards their Statutory Liquidity Ratio (SLR) requirements.

20. Commission:

Receiving offices will receive a commission of one percent of the total subscription received. At least 50 percent of this commission must be shared with the agents or sub-agents involved in the business procured through them.

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By introducing the Sovereign Gold Bond Scheme 2023-24, the Government of India aims to provide individuals and institutions with an attractive investment avenue in gold, offering safety, convenience, and market-linked returns. Investors can take advantage of this scheme to diversify their investment portfolios and participate in the growth potential of gold while enjoying additional benefits such as interest income and exemption from capital gains tax upon redemption.