Six smart things to know about sovereign gold bonds

1. Sovereign gold bonds ( SGBs) will be issued by Reserve Bank of India on behalf of the Government of India as an alternative to purchasing metal gold.

2. The SGBs will be restricted for sale to resident Indian entities including individuals, HUFs, trusts, universities and charitable institutions.

3. SGBs will offer an interest rate of 2.75% p.a. The interest will be payable semiannually on the initial value of investment and shall be taxable.

4. The minimum permissible bond should be worth 2 grams of gold, and the maximum can be 500 grams per person per fiscal year.

5. The tenor of the SGBs will be for a period of eight years with an exit option from the fifth year to be exercised on the interest payment dates.

6. The bonds will be also tradable on exchanges. Capital gains tax shall be levied as in case of physical gold.



(Content is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta)