The Sovereign Gold Bond Scheme 2022-23 series is one of the most awaited offerings this fiscal. The government is set to launch the first tranche of the scheme from June 20 to June 24. An issue price of 5,091 per gram of gold has been set for the upcoming tranche. However, investors planning to bid on the scheme can earn a discount over the issue price.
On Friday, in a statement, RBI said the nominal value of the bond was based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity for the last three business days of the week preceding the subscription period, i.e., June 15, June 16 and June 17, 2022, which works out to 5,091 per gram of gold.
Further, the central bank stated that the government, in consultation with the RBI, has decided to offer a discount of 50/-per gram less than the nominal value.
However, the discount of 50 is available to those investors who are applying for the scheme online, and the payment against the application is made through digital mode.
For such investors, the issue price of the gold bond will be 5,041.
The RBI will be issuing the gold bonds on behalf of the government. Investors wanting to bid should fall under the category of resident individuals, HUFs, Trusts, Universities, and Charitable Institutions.
As per the terms and conditions of the scheme, the gold bonds will be denominated in multiples of one gram of gold, with a basic unit of one gram.
The tenure of the gold bonds will be for eight years. However, a premature redemption option is allowed after the fifth year of the tenure.
The minimum permissible investment will be one gram of gold. 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 the case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
For the gold bonds, a maximum payment of 20,000 is allowed through cash mode. Payments can be made via demand draft, cheque, or electronic banking as well.
The investors will be compensated at a fixed rate of 2.50% per annum, payable semi-annually on the nominal value.
Further, the redemption price will be in Indian Rupees based on a simple average of the closing price of gold of 999 purity for the previous three working days as published by IBJA Ltd.
The capital gains tax arising on the redemption of SGB by an individual is exempted. The indexation benefits will be provided for long-term capital gains arising for any person on the transfer of the SGB.