With the Reserve Bank of India consultation, the GOI has decided to issue Sovereign Gold Bonds. 

Details of Sovereign Gold Bond 2021-22 Series VII

Opens on: Monday 25-Oct-2021

Closes on: Friday 29-Oct-2021

Issuance Date: Tuesday 02-Nov-2021

Issue price: Rs. 4,761/- per gram

Discount: Rs. 50 per gram (if you apply online)

Net price after discount: Rs 4,711/- per gram

From October 2021 to March 2022, the Sovereign Gold Bonds will be issued in Four Tranches  : 

S.No.	Tranche	Date of Subscription
1	2021-22 Series VII	Oct 25-29, 2021
2	2021-22 Series VIII	Nov 29-Dec 03, 2021
3	2021-22 Series IX	Jan 10-14, 2022
4	2021-22 Series X	Feb 28-Mar 04, 2022

Read our previous blogs to learn more about Sovereign Gold Bonds:

Sovereign Gold Bond 2021-22 Series I
Sovereign Gold Bond 2021-22 Series II

Have a Look at some of the points:

Tenor:  

The bond’s tenor is eight years.

Premature redemption: 

From the 5th year, thirty days before the coupon payment date, investors can approach the concerned bank/Post Office/agent. If the investor approaches the concerned post office/ bank at least one day before the coupon payment date, only then the request of the issuer will be entertained. 

However, as the bond will be listed in NSE and BSE, bond holders holding bonds in demat account can exit at anytime by selling their holding in the exchange.

Nomination facility:

Yes, nomination facility is available on Sovereign Gold Bonds as per the Government Securities Act, 2006, and the Government Securities Regulations, 2007. A nomination form is available along with the Application Form. But this is required only if you hold physical bonds. If the bonds are held in a demat account, a nominee in the demat account will be considered as a nominee for the bonds too.

A non-resident Indian may get the security transferred in his name on account of his being a nominee of a deceased investor provided that:

1. the Non-Resident investor shall need to hold the security till early redemption or till maturity; and
2. the interest and maturity proceeds of the investment shall not be repatriable.

Loan against Bonds:

The loan-to-value (LTV) ratio is set equal to the ordinary gold loan mandated by the Reserve Bank from time to time.

Transfer:

The bond can be transferable/ gifted to a friend/ relative/ anybody who fulfils the eligibility criteria. The Bonds shall be transferable before maturity by execution of Form ‘F’, which is available with the issuing agents. Bonds held in demat form can be transferred in exactly same way as shares held in demat account can be transferred.

Eligible Investor:

As defined under the FEMA (Foreign Exchange Management Act), 1999, A person resident in India can invest in SGB. Eligible investors include individuals, trusts, HUFs, charitable institutions and universities. With subsequent changes in the residential status of individual investors from resident to non-resident, they may continue to hold SGB till early maturity/redemption.

So, why invest in Sovereign Gold Bonds?

1. Safest way to buy and store gold

2. Earn 2.5% interest per annum payable semi-annually

3. Appreciation opportunity plus assured interest

4. Tradable on the stock exchanges

5. No TDS applicable

6. Available in both Demat and Paper Form

7. Indexation benefit for transferring after 3yrs but before maturity

8. No Capital Gain on redemption at the time of maturity.

Happy Investing.

Regards

Hey everyone. I hope you all are doing well. As we are enjoying this monsoon season of 2021, the SEBI has also contributed by providing opportunities to Indian companies to rain their shares in the open market through IPOs.

Let’s get some brief knowledge about it!

Initial Public Offering (IPO): where the basic meaning of the first word ‘Initial’ stands for the starting or the beginning, ‘Public’ concerning the people as a whole and ‘Offering’ is something offered to someone.
Therefore, IPO is the term where companies offer their shares to the public in an open market for the very first time.

There was a time when several companies came into the picture in this category. Got listed themselves. But many of us remained unaware of them, their name or their business model.
But now the time has changed. Numerous IPOs are being listed on the Indian Stock Exchange every month since 2020. Most of them have brought a drastic change in the market.

With some facts & figures let’s try to learn more about the newly listed companies in detail.

Name	Date (2021)	Change as per date
Indigo Paints Limited	20-22 Jan	75%
RailTel Corporation of India	16-18 Feb	16%
MTAR Technologies Limited	3-5 Mar	82.60%
Easy Trip Planners Limited	8-10 Mar	13.50%
Anupam Rasayan India Limited	12-16 Mar	-6.30%
Laxmi Organic Industries Ltd	15-17 Mar	19.62%
Kalyan Jewellers India Limited	16-18 Mar	-15%
Nazara Technologies Limited	17-19 Mar	81%
Barbeque Nation Hospitality Ltd	24-26 Mar	-2.03%
Macrotech Developers Limited	7-9 Apr	-10%
Shyam Metalics and Energy Ltd	14-16 Jun	24%
Krishna Institute of Medical Sciences Ltd	16-18 Jun	22%
India Pesticides Limited	23-25 Jun	22%
GR Infraprojects Ltd	7-9 Jul	105%
Clean Science & Technology Ltd	7-9 Jul	98.27%
Zomato Limited	14-16 Jul	52.53%
Tatva Chintan Pharma Chem Ltd	16-20 Jul	94.99%
Glenmark Life Sciences Limited	27-29 Jul	4.30%
Rolex Rings Limited	28-30 Jul	31.39%
Exxaro Tiles Limited	4-6 Aug	10.25%
Devyani International Limited	4-6 Aug	51%
Krsnaa Diagnostics Limited	4-6 Aug	8.35%
CarTrade Tech Limited	9-11 Aug	-1.12%
Nuvoco Vistas Corp Ltd	9-11 Aug	-14.91%
Aptus Value Housing Finance	10-12 Aug	-6.00%
Chemplast Sanmar Limited	10-12 Aug	1.66%

With the above information, you might conclude that IPOs are too good as they have shown great returns on their listing date. But that’s not the whole truth.
First of all, the allotment of shares during this process is entirely on your luck.
And secondly, one should understand the reason for the public issue. Is the company raising funds to clear their debts, enhance the technology, improve manufacturing or other departments? Or is IPO to give exit to existing shareholders and no money going into the company?

Several conditions designed by SEBI, the regulatory body of the Indian stock market, have to be followed by any of the company which wishes to apply for issuing their shares to the general public through IPOs. Every investor should be aware of those before applying for any of the IPO.

Through our Telegram channel, we update investors about upcoming IPOs and provide our view if one should subscribe for an IPO or skip it. We also share other investment ideas there. You may join this channel by clicking the link below.

Let’s end this blog here with a glimpse of upcoming IPOs and good wishes if you plan to apply for any of these companies.

Name	Expected Date	Industry Type
Ami Organics Limited	1-3 Sep	Chemicals
Vijaya Diagnostic Centre Limited	1-3 Sep	Diagnostic
One 97 Communications Ltd. (Paytm)	2021	Mobile Commerce Platform
Nykaa	2021	E-Retail Services
Seven Islands Shipping Limited	2021	Seaborne Logistics (Shipping)
Go Airlines (India) Ltd.	2021	Transport Activities
Fincare Small Finance Bank Ltd.	2021	Financial Services
ESAF Small Finance Bank Ltd.	2021	Financial Services
Fino Payments Bank Ltd.	2021	Monetary Services
Chemspec Chemicals Ltd.	2021	Manufacturing of Chemicals
Shriram Properties Ltd.	2021	Real Estate
Keventer Agro Limited	2021	Food Products
Sapphire Foods India Ltd.	2021	Restaurants, Bars, Canteens
VLCC Health Care Ltd.	2021	Personal Care Products

Capital Gain Bond (54EC)

Whenever anyone sells an asset (Land or Building or both) and has capital gain arising from it, he has to pay capital gain tax to the government. A short-term capital gains tax of 30 per cent is applicable for those in the highest tax bracket on selling a property within two years of purchase. A long-term capital gain tax of 20 per cent becomes applicable if sold after two years of purchase. 

One way to save taxes on long-term capital gains arising from the sale of immovable property is by investing the profit in specified tax-saving bonds under section 54EC of the Income Tax Act.

But as Capital Gain Bonds bear an interest rate of only 5%, is it wise to invest capital gains in these bonds and block your capital for 5 years? Or is it better to pay the capital gain tax and invest the balance sum in an alternate asset that gives better returns? 

Have a look at the comparative analysis for a person in the income tax bracket of 30%:

So effectively, the total money you would have at the end of 5 years would be the same if you deposit your Capital gains in Capital Gain Bonds @ 5% or if you pay capital gain tax now and invest the balance amount @ 13.39%. These calculations do not consider the income generated on reinvestment of interest pay-out received during these five years and surcharge/cess payable on Taxes.

What are Capital Gain Bonds (54EC Bonds)

As per the Income Tax Act, 1961, any long term capital gains from the transfer or sale of real estate would be taxable. Such gains are exempted from capital gain tax if invested in capital gain bonds specified in section 54EC of the income tax act, subject to the upper limit of Rs.50 Lakh in a Financial Year (FY).

Following are the main feature for 54EC Bonds:
Rate of Interest: 5.00% p.a. payable annually
Min Investment: 1 Bond (Rs 10,000)
Max Investment: 500 Bonds (Rs 50,00,000) in a Financial Year
Taxation: Interest is taxable, but no TDS is deducted
Redemption: Automatic Redemption after 5 Years
Mode of Holding: Physical or Demat

Who issues Capital Gain Bonds?

The eligible bonds under Section 54EC are issued by:
REC (Rural Electrification Corporation Ltd), 
PFC (Power Finance Corporation Ltd), 
NHAI (National Highways Authority of India) and 
IRFC (Indian Railways Finance Corporation Limited).

Why invest in 54 EC bonds?

The profit that arises on the sale of Capital Asset (land or building or both), known as long-term capital gains, attract Capital Gains Tax. However, long-term capital gain tax can be saved by investing the profit in the capital gain bonds specified under section 54 EC.

What is the maturity period of Capital Gain Bonds (54EC)?

Capital Gain Bonds (54EC) are redeemable after 5 Years.

Is there a lock-in period for Capital Gain Bonds (54EC)?

Yes, there is a Lock-in period of 5 Years in 54EC bonds (effective from April 2018), and they are non-transferable. However, in case of the death of the bondholder/beneficiary, the transmission of bonds to the legal heirs is allowed.

How do I buy Capital Gain Bonds (54EC)?

Our team at TR Capital can assist you in buying Capital Gain Bonds issued by all four issuers. Though it is advisable to buy these bonds in demat form, we can assist you in buying these bonds in both demat form or physical form as per your choice.

What are the charges for buying Capital Gain Bonds (54EC)?

We do not charge anything from the investors for applying Capital Gain Bonds (54EC).

Are Capital Gain Bonds (54EC) Safe?

The government backs 54EC bonds; hence the risk factor associated with buying 54EC bonds is mitigated. The 54 EC bonds are AAA rated by ICRA and CRISIL.

What is the Time limit to invest in Capital Gain Bonds (54EC) after the sale of Capital Asset (Land or Building or both)?

The profit from the sale of an asset should be invested in Capital Gain Bonds within 6 months from the date of sale.

When is the interest paid for Capital Gain Bonds (54EC)?

Interest is paid every year on the following dates:
PFC- 54EC Bonds: on 31st July
REC- 54EC Bonds: on 30th June
IRFC- 54EC Bonds: on 15th October
NHAI- 54EC Bonds on 31st March

Is interest received on 54EC Bonds tax-free?

Interest earned on bonds is taxable. However, TDS is not deducted at the time of payment of interest. 

What is the minimum investment amount in Capital Gain Bonds (54EC)?

The minimum investment in 54EC bonds is 1 bond of Rs. 10,000.

Is there any maximum limit of investment in Capital Gain Bonds (54EC)?

The maximum investment allowed in 54EC bonds is 500 bonds (or Rs 50 lakhs) in a financial year.

What is the procedure in the eventuality of the death of an investor?

Bonds are not transferable; however, they can be transmitted to the nominee in the event of the bondholder’s death. The interest accrued from the bond after the date of transmission shall be taxable in the hands of the nominee. The nominee shall hold the bonds till maturity.

Usha Verma
Equity Advisor, TR Capital
B.Com., CA IPCC (Intermediate)

Date: 22-May-2021

Details of Sovereign Gold Bond 2021-22 Series II
Opens on: 24-May-2021
Closes on: 28-May-2021  
Issue price: Rs. 4,842 per gram
Discount: Rs. 50 per gram (if you apply online)
Net price after discount: Rs 4,792 per Gram

Yesterday, RBI concluded the sale of Sovereign Gold Bonds 2021-22 Series I. Series II will be up for the subscription from 24-May-2021. The price of Series I was Rs 4777/gram or Rs 4727/gram for online applications. The price of Series II is Rs 65/gram higher than Series I at Rs 4842/gram or Rs 4792/gram for online applications.

Sovereign Gold Bond (SGBs) are government securities denominated in grams of Gold. RBI issues them on behalf of the Govt. of India. They bear an interest @2.50% (fixed rate) per annum on the issue price.

RBI will issue Sovereign Gold bonds in six tranches in 1st half of 2021

Sr. No.	Tranche	Subscription Period
1.	2021-22 Series I	May 17-21, 2021
2.	2021-22 Series II	May 24-28, 2021
3.	2021-22 Series III	May 31-June 04, 2021
4.	2021-22 Series IV	July 12-16, 2021
5.	2021-22 Series V	Aug 09-13, 2021
6.	2021-22 Series VI	Aug 30-Sep 03, 2021

How is the issue price of Sovereign Gold Bonds decided?

Issue price of Sovereign Gold Bonds is fixed based on a simple average of the closing prices of Gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA), for the last three working days of the week preceding the subscription period.

Based on the average of the closing prices of 10 gram of Gold of 999 purity, 48177, 48534 and 48553, published by IBJA on 19, 20 and 21-May respectively, the price of SGB 2021 Series II is Rs 4842 / gram.

How is the price of Sovereign Gold Bonds decided on maturity?

Similar to the calculation method of fixing the issue price of Sovereign Gold Bonds, the maturity price of SGB will be a simple average of the closing prices of Gold of 999 purity, published by IBJA for the last three working days preceding the maturity date.

How buying Sovereign Gold Bonds 2021-22 Series I became lucrative?

The price of SGB 2021-22 Series I was Rs 4727 per gram for online applications. IBJA published the closing price of Gold of 999 purity as Rs 48553 for 10 grams on 21-May-2021. Thus, buying 10 grams of SGB on 21-May-2021 was Rs 1283 cheaper than buying 10 grams of physical Gold. Additionally, there is no GST on Sovereign Gold Bonds, whereas there is a GST of 3% on physical Gold.

Investment in Sovereign Gold Bonds offer three benefits:

1. Appreciation potential, same as that of Gold
2. An interest of 2.5% per annum on the issue price
3. Capital gains are tax-free if you hold bonds till maturity.

Look out for the prices of Gold on 28-May. If the prices of Gold increase during the coming week, you might get a nice arbitrage opportunity in SGB and MCX.

Please read our previous blog to learn more about Sovereign Gold Bonds.

Happy investing.

Regards
Aashish Aggarwal
Director
TR Capital, Hisar

Details of Sovereign Gold Bond 2021-22 Series I
Opens on: 17-May-2021
Closes on: 21-May-2021 
Issue price: Rs. 4,777 per gram
Discount: Rs. 50 per gram (if you apply online)
Net price after discount: Rs 4,727 per Gram

Date: 15-May-2021

Sovereign Gold Bond (SGBs) are government securities denominated in grams of gold and issued by the Reserve Bank of India (RBI) on behalf of Govt. of India. The Bonds bear an interest @2.50% (fixed rate) per annum on the initial investment amount. Interest will be credited semi-annually to the investor’s bank account, and the last interest will be payable on maturity along with the principal. In consultation with the Reserve Bank of India, the Government of India issue Sovereign Gold Bonds in multiple Tranches every year.

On 12-May-2021 Ministry of finance issued the Calendar for issuance of Sovereign Gold bonds in 6 tranches from May 2021 to September 2021

S.No.	Tranche	Date of Subscription	Date of Issuance
1.	2021-22 Series I	May 17-21, 2021	May 25, 2021
2.	2021-22 Series II	May 24-28, 2021	June 01, 2021
3.	2021-22 Series III	May 31- June 04, 2021	June 08, 2021
4.	2021-22 Series IV	July 12-16, 2021	July 20, 2021
5.	2021-22 Series V	Aug 09-13, 2021	Aug 17, 2021
6.	2021-22 Series VI	Aug 30- Sept 03, 2021	Sept. 07, 2021

Who is eligible to invest in Sovereign Gold Bonds?

Individuals, HUFs, trusts, universities and charitable institutions can apply Sovereign Gold Bonds.

• Only resident Individuals 
• Joint holders are also allowed
• Guardian can also make an application on behalf of a minor
  

What is the maturity period of Sovereign Gold Bonds?

8 Years

Is there a lock-in period for Sovereign Gold Bonds?

No, there is no lock-in period. Sovereign Gold Bonds are tradable on NSE and BSE. These are tradable only if held in Demat form.

Are Sovereign Gold Bonds safe?

These are issued by RBI and have a sovereign guarantee. Fixed interest @ 2.5% p.a. is paid semi-annually at the issue price of the Bonds. The maturity amount depends upon the market price of gold at the time of maturity. However, the quantity of gold purchased in terms of weight remains the same.

How do I apply Sovereign Gold Bonds?

• You can apply Sovereign gold bonds yourself from our MO Investor app.
• You can also call our trading team, and they can apply on your behalf.

You get the discount available for online application in both ways.

What are the charges for buying Sovereign Gold Bonds?

We do not charge anything from investors for applying Sovereign Gold Bonds.

What is better between applying Sovereign Gold Bond through a stockbroker or a Bank?

Both us and banks do not levy any charges on applying Sovereign Gold Bonds. We ensure that you received your bonds in your Demat account.
Unlike shares, which, even if issued in physical form, can be converted to demat form at a later date, Sovereign Gold Bonds, once issued in physical form, can not be converted to demat form at a later date. Physical bonds are not tradable, and the investor will have to hold them till maturity.

Is investment in Sovereign Gold Bond better than physical gold?

• Risks and costs of storage are eliminated.
• The bonds can be held in Demat Form, eliminating the risk of loss of scrip etc.
• Capital gain on Sovereign Gold Bonds is tax-free if held till maturity.
• GST @ 3% charged on buying physical gold is not charged on buying Sovereign Gold Bonds.

Is there any Tax Benefit on buying Sovereign Gold Bond over Physical Gold?

In the case of Individual, No Capital Gain arises on Redemption on Maturity (i.e. after 8 Years) of Sovereign gold bonds.

On selling bonds after holding them for more than 3 years, Capital gains are subject to Long term capital gain tax of 20% after providing indexation benefit, which is similar to taxation on Physical Gold.

Can I hold Sovereign Gold Bonds for more than 8 years?

No, Bonds are automatically redeemed on maturity, and the amount is directly credited to the investors’ bank account. However, the capital gains on bonds are tax-free at the time of maturity.

Can I convert Sovereign Gold bonds to physical gold?

No, these bonds can not be converted to physical gold. An investor can sell these bonds in NSE and BSE if he wish to sell before maturity. Or the money is credited to the investors’ bank account on maturity.

Is interest received on Sovereign Bold Bonds tax-free?

No, interest received on Sovereign Gold Bonds is taxed as normal income.

Is GST levied on buying Sovereign Gold Bonds?

There is no GST on Sovereign Gold Bonds.

What is the minimum investment amount in Sovereign Gold Bond?

Sovereign Gold Bond is issued in the denominations of 1 gram of gold and multiples thereof. The Minimum investment in a Sovereign Gold bond is 1 Gram.

Is there any maximum limit of investment in Sovereign Gold Bonds?

• For individuals: the maximum limit of investment in Sovereign Gold Bond is 4 kg per year.
• For Hindu Undivided Family (HUF): the maximum limit of investment in Sovereign Gold Bond is 4 kg per year.
• For trusts and similar entities: the maximum limit of investment in Sovereign Gold Bond is 20 kg per year. 

In the case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

What is the procedure in the eventuality of the death of an investor?

If Sovereign gold bonds are held in a Demat account, bonds are also transferred along with other shares and bonds to the Demat account of the nominee. The process is very simple. The nominee has to approach his DP (mostly the same as his stockbroker) and submit the death certificate of the Demat account holder.

For bonds held in physical form, the process is a bit tedious. The nominee/nominees to the Bond may approach the respective Receiving Office with their claim. Officer will recognize the claim of the nominee/nominees in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007. In the absence of nomination, the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) submitted to the Receiving Offices/Depository. The above provisions are applicable in the case of a deceased minor investor also. In such cases, the Bond title will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.

By Usha Verma
NISM certified in Equity derivatives and Currency Derivatives
B.Com., CA IPCC(Intermediate)