With an aim to provide an alternative for buying physical gold, the Reserve Bank of India (RBI) has fixed the public issue price at Rs 2,684 per gram for the sovereign gold bonds. This is the first tranche of the gold bond scheme and subsequent tranches would be notified later. The applications for the bonds will be accepted from November 5 to November 20, 2015.
RBI has notified that the rates have been fixed on the basis of simple average of closing price for gold of 999 purity of the previous week (October 26-30, 2015) published by the India Bullion and Jewellers Association (IBJA). These bonds which will be sold through banks and designated post offices would be issued on November 26. These will be issued by the RBI on behalf of the Government of India. Therefore, these bonds will have a sovereign guarantee.
Indian residents including individuals, HUFs, trusts, universities and charitable institutions can buy the bonds. The Gold Bond scheme will offer investors an interest rate of 2.75 per cent and a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams and tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.
The interest earned on gold bonds would be taxable, and capital gains tax shall be levied as in case of physical gold. The redemption of gold bonds will be done by banks, NBFCs and other authorized entities. Earlier, the Budget 2015-16 had proposed to launch a Sovereign Gold Bond (SGB) scheme to develop a financial asset as an alternative to gold.
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