Sovereign Gold Bond scheme 2023-24 tranche III: All your FAQs answered here

Sovereign Gold Bond interest rate: These bonds bear interest at the rate of 2.50% per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor

The third tranche of the Sovereign Gold Bond 2023-24 scheme will open for subscription on Monday. The investors can apply till December 22. In the latest tranche, the Reserve Bank of India (RBI) has fixed the issue price at Rs 6,199 per gram for gold bonds with purity.

What is Sovereign Gold Bond scheme?

The SGBs are government securities denominated in grams of gold. They are substitutes for those who do not want to hold physical gold. The investors need to pay the issue price in cash and the bonds will be redeemed in cash on maturity.

The SGBs are issued by the Reserve Bank on behalf of the Government of India. The Sovereign Gold Bond Scheme was launched by the government in November 2015.

 

Who is eligible to buy SGBs?

Any resident of India is eligible to buy SGBs. These include Hindu Undivided Families (HUFs), trusts, universities and charitable institutes. Joint holding of SGBs is also allowed. Moreover, guardians can apply for the SGBs under the name of a minor.

According to the RBI website, individual investors with subsequent changes in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

What is the minimum and maximum limit for investment?

The SGBs are issued in denominations of one gram of gold and in multiples thereof. The minimum investment in the bond is one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March).

In the case of joint holding, the limit applies to the first applicant. The annual ceiling will include bonds subscribed under different tranches during initial issuance by the Centre and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other financial institutions.

What is the rate of interest and how will the interest be paid?

The Sovereign Gold Bonds bear interest at the rate of 2.50 per cent per annum on the amount of initial investment. Interest is credited semi-annually to the bank account of the investor and the last interest is payable on maturity along with the principal.

Who are the authorised agencies selling the SGBs?

Sovereign Gold Bonds are sold through 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 either directly or through their agents.

How to buy Sovereign Gold Bond online?

An investor can apply for SGBs 2023-24 tranche III online through the website of the listed scheduled commercial banks. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

These bonds can be bought via net banking on the mobile application of banks. They can also be bought on online broker apps like Paytm Money and Upstox. Moreover, the SGBs can also be bought on the RBI Retail direct website.

What is the selling price for SGBs?

The nominal value of Sovereign Gold Bonds is in Rupees and fixed on the basis of the simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last three business days of the week preceding the subscription period.

Sovereign Gold Bond 2023: Is premature redemption allowed?

Though the tenor of the bond is eight years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue on coupon payment dates. The bond will be tradable on exchanges if held in demat form. It can also be transferred to any other eligible investor.

Sovereign Gold Bond 2023-24: Is TDS applicable on the bond?

The tax deducted at the source (TDS) is not applicable to the SGB. However, it is the responsibility of the bondholder to comply with the tax laws.

Sovereign Gold Bond: What happens in case of the death of an investor?

The nominee/nominees to the SGBs will have to approach the respective receiving office with their claim.

According to RBI, "The claim of the nominee/nominees will be recognized in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007."

If there is no nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate has to be submitted to the receiving offices/depository.

"It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in the Government Securities Act, 2006 and not necessarily to the Natural Guardian," the RBI said.