SOVEREIGN GOLD BONDS
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Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) are Government bonds that are issued (by the RBI on behalf of the Government) on payment of rupees but denominated in grams of gold. The gold bonds are floated in the market, which allow you to capture the price movement and pay you a fixed interest just like bank fixed deposits give. The minimum investment is 1 gram. The maximum gold you can buy through gold bonds is 4 kgs per investor per financial year. Nomination facility is available. It has a fixed interest rate of 2. 50% p.a. The interest is paid every six months or semi-annually on the nominal value.

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The tenure of gold bonds is 8 years and one can exit after 5 years. If you want to exit before maturity, you will have to do early redemption. The gold bond investors have the option of selling the bonds anytime on stock exchanges. In case the bonds are sold on the exchange platform, the applicable capital gains tax will be payable at the same rate as for physical gold. The RBI issues certificates to all investors in gold bonds.

All resident individuals, HUFs, registered entities like a trust, universities, charitable institutions, societies and clubs, partnership firms and private or public limited companies can buy gold bonds. However, Non- Resident Indians (NRIs) and Foreign Institutions/Entities will not be allowed to hold gold bonds.