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- The Government of India in consultation with the Reserve Bank of India has decided to issue Sovereign Gold Bonds.
About Sovereign Gold Bonds
- Launched in: November 2015.
- Objective: To reduce the demand for physical gold and shift a part of the domestic savings (to purchase of gold) into financial savings.
- Issuance: The Gold Bonds are issued as Government of India Stock under the Government Securities (GS) Act, 2006.
- These are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
- The Bonds will be sold through Scheduled Commercial banks(except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
- Eligibility: It is restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.
- Price: The price is calculated based on the spot price of gold as provided by the Mumbai-based India Bullion and Jewellers Association (IBJA).
- Term: Maturity period is 8 years, with an option to exit the investment after the first five years.
- Investment Limit: Gold bonds can be purchased in multiples of one unit.
- The upper limit for retail (individual) investors and HUFs is 4 kilograms (4,000 units) each per financial year.
- For trusts and similar entities, an upper limit of 20 kilograms per financial year is applicable.
- Minimum permissible investment is 1 gram of gold.
- Interest Rate: A fixed rate of 2.5% per annum is applicable on the scheme, payable semi-annually.
- The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act, 1961.
Source: PIB
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