Sovereign Gold Bonds FAQs

Below are the FAQs you must go through to know about general questions on Sovereign Gold Bonds

What is Sovereign Gold Bond (SGB)?

Sovereign Gold Fund is a bond issued by RBI on behalf of Government of India. The bonds will be denominated in grams of gold and shall be sold/repurchased at the price of gold prevailing in the market at the time of sale/repurchase.

Who will be the issuing agency for the Bonds?

The Bonds will be issued by Reserve Bank of India (RBI) on behalf of the Government of India.

Can a minor invest in SGB?

Yes, the application on behalf of the minor has to be made by his/her guardian.

Can an investor hold more than one investor ID for subscribing to the SGB?

No. An investor can have only one unique ID. The unique investor ID is to be used for all subsequent investments in the scheme.

How can I invest in Gold Bonds?

Bonds will be open for subscription from time to time as announced by govt. of India. The Bonds will be available for sale through banks and designated post offices, as may be notified.

In what denominations the Bonds will be available?

The Gold Bonds will be denominated in multiples of grams of gold with a basic unit of 1 gram. Minimum investment per person is 1 unit,i.e., 1 gram of gold.

What will be the interest rate on such Bonds?

The Sovereign Gold Bonds will offer an interest rate of 2.50%. The interest will be payable semi-annually on the initial value of investment.

Is the interest earned on these Bonds taxable?

Yes, the interest earned on Gold Bonds will be taxable as per the provisions of Sec. 43 of Income Tax Act, 1961.

Will TDS be applicable on interest received on Sovereign Gold Bonds?

No, TDS is not applicable.

What is the tenure of these Bonds?

The tenor of the bond will be for a period of 8 years.

What will be the issue and redemption price of Sovereign Gold Bonds?

The price of the Bond will be fixed in rupee terms, on the basis of the previous week’s simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd. The same procedure would be followed for calculating the redemption price for the bonds.

What is the maximum investment a person can make?

The maximum limit of subscription is 4 kg for individuals & HUF and 20 kg for trusts and similar entities notified by the Government per financial year(April – March).

How will my maximum permissible investment limit decided in case of joint holding?

The maximum limit will be applicable to the first applicant in case of a joint holding for that specific application.

Is the limit on annual investment applicable if a person buy on the Exchanges?

Yes, the annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market.

Do I need to pay any tax at the time of receipt of sale/maturity proceeds of Bonds?

If the holding period is less than 3 years, you will need to pay Short Term Capital Gains Tax at the marginal tax rate. If the holding period is more than 3 years, you will need to pay Long Term Capital Gains tax @20% with indexation. However, if the bond is held till maturity, the Capital Gains is tax-free.

In what form the bonds will be issued?

The investors will be issued a Stock/Holding Certificate under Government of India Stock Act, 2006. The bonds are also eligible for conversion into demat form.

Can the Bonds be used as collateral for availing loans?

Yes, the Bonds can be used as collateral for loans and the loan-to-value (LTV) ratio will be set equal to ordinary gold loan mandated by the Reserve Bank of India from time to time.

Can I sell the Bonds in secondary market?

Yes, the Bonds will be tradable on stock exchanges from a date to be notified by RBI.

Can I encash the Bond anytime I want?

Yes. Early encashment/redemption of the Bond is allowed after fifth year from the date of issue on interest payment dates. The Bonds will also be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

Can I gift the Bonds to a relative or friend on some occasion?

The Bond can be gifted / transferred to a relative / friend / anybody who is eligible to invest in these Bonds.

Can I get part repayment of these bonds at the time of exercising put option?

Yes, part holdings can be redeemed in multiples of one gram.

Are there any risks in investing in Sovereign Gold Bonds?

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has purchased.

Do term insurance plans provide riders?

Many Term insurance plan offer riders to the policyholders. Opting for riders enhances the value of your coverage. It is an additional protection layer for your long-term security. Moreover, analyze your needs before investing in riders.

What are different types of Term Plan?

1. Level Term Plans.

2. Increasing Term Plans.

3. Decreasing Term Plans.

4. Return of Premium Term Plans.

5. Convertible Term Plans.