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
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?
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)