Government's sovereign gold bond scheme to open for subscription from mid-October till February

The government's sovereign gold bond scheme will be open for subscription from mid-October, running up to five tranches till February, the Reserve Bank said Monday.

The Sovereign Gold Bonds would be issued every month from October 2018 to February 2019 as per the calendar specified, the RBI said in a release.

The bonds would be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and stock exchanges -- National Stock Exchange and BSE.

The first tranche of the scheme would be open for subscription from October 15-19 and the bonds would be issued on October 23.

The next tranche would be open from November 5-9 (rpt) 9 and issuance would be on November 13. The next one would be available for subscription from December 24-28 and the bonds would be issued on January 1, 2019.

Another tranche would open for subscription from January 14-18 and the issuance of bonds would be on January 22. The final one would be from February 4-8 and those would be issued on February 12.

For the current fiscal, the first tranche of the sovereign gold bond (SGB) and its subscription opened on April 16.

The sovereign gold bond scheme was launched in November 2015 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.

Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment in the bonds is one gram with a maximum limit of subscription of 500 grams per person per fiscal year.

The maximum limit of subscription is 4 kg for individual and HUF and 20 kg for trusts and similar entities per fiscal (April-March).

RBI said the payment for the bonds would be through cash, maximum of Rs 20,000, demand draft, cheque or electronic banking.

The Bonds are eligible for conversion into demat form and can be used as collateral for loans.

The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

The interest on gold bonds would be taxable.

"The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on the transfer of bond," RBI said.

Know Your Customer (KYC) norms would be the same as that for the purchase of physical gold and every application must have PAN number of the investor.

(With inputs from agencies.)