Government of India has launched the fourth tranche of Sovereign Gold Bonds from September 1 to 9 , 2016. These bonds are investment scheme where investors could buy gold in the form of Gold Bonds from Government of India.
Eligibility: Resident Individuals, HUFs, trusts, universities, charitable institutions, etc
Application Date: September 1 to 9, 2016
Price of each Bond: Rs 3,150 per bond [Weekly average price of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd].
Interest Rate: 2.75% per annum payable semi-annually in the bank account
Minimum Investment Limit: 2 bonds
Also Read: Five Signs of Purity for Gold Jewellery
Maximum Investment Limit: 500 bonds per person per financial year
Tenure: 8 year [early exit possible from 5th year on wards interest payment dates]
Where to buy? Banks, Designated Post Offices and Stock Holding Corporation of India Ltd. (directly or through agents)
Application Form: You can download the form from RBI website or from respective banks. Also you can invest through your demat accounts.
KYC Documents: Voter ID, Aadhaar card/PAN or TAN /Passport i.e same as for purchase of physical gold
Payment Mode: Demand Draft, Cheque or Electronic Payment. Cash payment can only be done up to Rs 20,000.
Joint Holding: Possible (the maximum limit applies to first holder only)
Investment in the name of Minor is possible to be made by his/her guardian
Redemption Pricing: Based on previous week average price of closing price of gold of 999 purity as per India Bullion and Jewellers Association Ltd
Also Read: Gold Deposit Scheme
Loan: bonds are allowed as collateral. The loan to value can be same as in case of physical gold
Listing: The bonds would be listed on stock exchange and can be sold/bought though demat account once RBI notifies the same. The first trance is already listed and was trading @ 3190 on BSE as of today.
There are three parts to taxation:
Invest in sovereign Gold bonds only if you wanted to invest in gold or need gold for marriage etc in next 5 to 8 years. These bonds are efficient way of investment as you need not worry about purity; there is no loss of making charges and no tension about safety and storage. Additionally you get 2.75% interest every year. However you should NOT invest aggressively in gold as it would at best give inflation equivalent returns.
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