Sovereign Gold Bond Series VI opens on August 30: What is it, who can buy, benefits, discounts and other details

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What’s on offer?

The RBI has set the issue price for Sovereign Gold Bond Scheme 2021-2022, Series VI, at Rs 4,732 per gram of gold. The price at which the bonds are being offered is close to the prices of SGB that are traded in secondary market.

“Planning to invest in Gold? Here are 6 golden reasons to invest in Sovereign Gold Bonds. SBI customers can invest in these bonds on http://onlinesbi.com under e-services," State Bank of India tweeted.

Discounts on SGBs?

Among other details, the RBI on August 27 had said that a discount of Rs 50 per gram would be provided on the nominal value to those investors applying online and where the payment against the application is made through digital mode.

"For such investors, the issue price of Gold Bond will be Rs 4,682 per gram of gold," the RBI said.

Benefits of buying SGBs:

At the time of redemption or premature redemption, an investor receives the ongoing market price for the quantity of gold s/he paid, so the investment remains secure. Also, SGB is free from issues like making charges and purity in the case of gold in jewellery form. Apart from these, SGBs are held in the books of RBI or in demat form which eliminates the risk of loss of scrip, among others.

Who can invest?

a) Indian residents as defined under Foreign Exchange Management Act, 1999. b) Individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions. c) A minor can invest in SGB, provided guardians have to make the application on behalf of the minor.

Authorised agencies to sell SGBs:

Offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks, designated post offices, Stock Holding Corporation of India Ltd (SHCIL) and the authorised stock exchanges.

Minimum and maximum limit of investment:

The minimum investment in the SGB is one gram with a maximum limit of subscription of 4kg for individuals, 4kg for HUFs and 20kg for trusts and similar entities notified by the government from time to time per fiscal year from April to March.

Interest rate paid on SGB:

The SGBs bear interest at a fixed rate of 2.50 percent per annum on the amount of initial investment.

Tax implications:

As per provisions of the Income-tax Act, 1961 (43 of 1961), the interest on the SGBs will be taxable, while capital gains tax arising on redemption of SGB to an individual has been exempted. However, TDS is not applicable on the bond.

Previous issue of SGB:

The previous and fifth tranche of SGBs issued by the RBI for this FY 2021-22 opened on August 9, 2021 and closed on August 13, 2021. The price was set at Rs 4,790 per bond and the bonds were issued on August 17, 2021.