The Union government has launched the Gold Bond Scheme applications for which were accepted between 5-20 November 2015. The bonds were issued by the Reserve Bank of India, on behalf of the Union government.
The bonds were sold to Indian entities only, including residents, trusts, universities and charitable institutions. The minimum permissible bond was worth 2 grams of gold, and the maximum 500 grams. The Reserve Bank fixed the public issue price at ₹2,684 per gram for the sovereign gold bonds. The Sovereign Gold Bonds offer an interest rate of 2.75%. The interest will be payable semi-annually on the initial value of investment.
The tenor of the bond will be for a period of eight years, with exit option from fifth year, to be exercised on the interest payment dates. The price of the bond will be fixed in rupee terms, on the basis of the previous week’s (Monday – Friday) 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. The interest earned on gold bonds would be taxable, and capital gains tax shall be levied as in case of physical gold.
The bonds are tradable on exchanges and will be eligible for Statutory Liquidity Ratio. Know your customer (KYC) norms will be the same as that for purchase of physical gold.
