The first series of the Sovereign Gold Bonds Scheme for this year (2017-18 Series I) that opened on April 24, closes today (April 28). Ever since the launch of the scheme that allows people to own gold in the form of certificate instead of in the pyhiscal form, the government has been gradually making it attractive to lure buyers away from physical gold.
Here are the highlights of the scheme that closes within hours from now (source: RBI):
The bonds are issued by the Reserve Bank of India on behalf of the Indian government.
The price per bond, representing 1 gm gold, is Rs 2,901 (after the Rs 50 discount).
The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
The tenure for the bond is 8 years, with option to exit from the fifth, sixth and seventh year.
Bondholders will get interest at 2.50 percent per annum on the amount of initial investment. It shall commence from the date of its issue and paid twice in a year.
The bonds are sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated Post Offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
Payment for the bonds will be through cash payment (upto a maximum of ₹ 20,000) or demand draft or cheque or electronic banking.
The bonds will be alloted on May 12, 2017.
The bonds will be tradeable on stock exchanges.
There won't be any capital gains tax on redemption.
The bonds can be used as collaterals for taking loans.
Gold bonds better than gold ETFs
Value Research, which advises people on personal finance, said that it makes sense to buy gold bonds than invest in gold ETFs.
"One, they pay an interest on initial investment, payable every six months. Two, gold ETFs charge management charges of up to 1 per cent, whereas gold bonds do not have any charges.Three, gold bonds are exempt from capital gains tax on redemption whereas the capital gains in gold ETF will be taxed for both short term and long term capital gains," it said in a response to a query, on its website.
Meanwhile, gold stocks such as Titan, PC Jeweller, Tribhovandas Bhimji Zaveri (TBZ) and Gitanjali Gems are trading sideways on the stock exchanges. TBZ shares were up 1.37 percent at Rs 96.30 apiece on the BSE at around 12.10 pm while Titan, which retails gold jewellery under the Tanishq brand, was down 0.55 percent at Rs 475. PC Jeweller was up 0.71 percent at Rs 427.
