*****Please Visit My Youtube Channel ComTech.Rstvarthi for Engineering Entertainment Educational Filmy shorts.*****
On 16 Jun 2023, the Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds (SGBS) in tranches for 2023-24.The first SGB scheme was launched by the Government in November 2015, under Gold Monetisation Scheme with an objective to reduce the demand for physical gold and shift a part of the domestic savings used for the purchase of gold – into financial savings.
Key Points about the Bonds
Who will issue the Bonds:
The Bonds are issued by the Reserve Bank of India on behalf of the Government of India.
Eligibility for the Bonds:
SGBS Bonds will be restricted for sale to resident individuals, HUFS (Hindu Undivided Family), Trusts, Universities and Charitable Institutions
Tenor of the Bonds:
The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year.
Minimum Amount of Weight of Gold in the Bonds:
Minimum permissible investment will be One gram of gold.
Maxmum Amount of Weight of Gold in the Bonds:
Maximum limit The maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal year (April-March) notified by the Government from time to time.
In case of Joint Holding of the Bonds:
In case of joint holding, the investment limit of 4 Kg will be applied to the first applicant only.
What is the Issue Price?
Price of SGB will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited.
Where will you get these Bonds?
SGBS will be sold through Scheduled Commercial banks (except Small Finance Banks, Payment Banks and Regional Rural Banks), Stock Holding Corporation of India Limited, Clearing Corporation of India Limited, designated post offices and National Stock Exchange of India Limited and Bombay Stock Exchange Limited, either directly or through agents.
What is the Interest Rate of these Bonds?
The investors will be compensated at a fixed rate of 2.50% per annum payable semi- annually on the nominal value either face value or stated value.
Are they can be used for Loans?
The SGBS can be used as collateral for loans.
What about Tax?
The interest on SGBS shall be taxable as per the provision of the Income Tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual is exempted.
Are Bonds are Eligible for Trading?
SGBS Sovereign Gold Bonds shall be eligible for trading.
What about SLR(Statutory Liquidity Ratio) Of Bonds?
SGBS obtained by banks through the pledge process will be considered as part of their Statutory Liquidity Ratio requirements.
Disadvantages of Sovereign Gold Bonds:
Whenever the price of gold falls, then investors face some capital loss. Another Point is the interest income generated by SGBs is taxable, the redemption amount on maturity is not. The Sovereign Gold Bonds investment comes with a stipulated lock-in period, as a result the investment potentially lacks liquidity. Several Posts and Blogs are written on this topic.
India Bullion and Jewellers Association Ltd. (IBJA):
IBJA was established in 1919 as an association for bullion traders in India. It is considered the apex association for all bullion and jewellery associations in India.is considered the apex association for all bullion and jewellery associations in India.IBJA owns a building in Zaveri Bazaar, Mumbai, where it carries out various business activities for the bullion and jewellery industry
IBJA is involved in promoting trade through exhibitions and is setting up its own Domestic Gold Spot exchange, Bullion refinery, and gems & jewellery park.It assists its members in promoting and regulating bullion trade, resolving disputes, providing a neutral platform for weighing precious metals, and interacting with government departments.