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(THE GIST OF PIB) Sovereign Gold Bonds Scheme

[March-2022]

Government of India has announced that Sovereign Gold Bonds 2021-22 will be opened for subscription during the period February 28- March 04, 2022.

Sovereign Gold Bonds (SGBs) are bonds that are issued by the RBI on behalf of the Government on payment of rupees but denominated in grams of gold.
The value of these bonds is tied to the value of gold. On redemption, the investor gets interest income and the prevailing price of gold.
These bonds are thus different from usual Government securities (G-secs) as the redemption value at the time of maturity is not a fixed sum, but linked to the price of an underlying commodity called gold.
It seeks to encourage people to buy gold bonds instead of actual gold.

The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
The Bonds are denominated in units of one gram of gold and multiples thereof.
Minimum investment in the Bond shall be 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.
The Bonds will be repayable on the expiration of eight years from the date of issue.
Premature redemption of the Bond is allowed from the fifth year of the date of issue on the interest payment dates.
The investment in the Bonds will be eligible for Statutory Liquidity Ratio (SLR) compliance by banks.
These bonds can also be used as collateral for loans.
The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual has been exempted.