Sovereign Gold Bond Scheme – Sep-2016 – 5th Tranche

Sovereign Gold Bond Scheme Sep-2016Sovereign Gold Bond Scheme – Sep-2016 – 5th Tranche


Sovereign gold bonds issued in last 4 Tranches (Lots) are trading at a premium on stock exchanges. With investors showing high interest, Govt. of India has opened Tranche-V of Sovereign Gold Bond Scheme today. Capital gains arising from these bonds are exempted from income tax. What are the key features of Sovereign Gold Bond Scheme – Sep-2016 – Tranche 5? What is the process to apply for these bonds? Should you invest in Sovereign Gold Bond Scheme Sep-2016? In this article, I would provide complete review of this.

Also Read: Gold Mutual Funds gave upto 80% returns – Should you still invest?

Sovereign Gold Bond Scheme – Sep-2016 – 5th Tranche


  • These Sovereign Gold Bonds of September 2016 would open for subscription from 1st September and closes on 9th September, 2016.
  • Resident Indians are eligible to apply for this Sovereign Gold-Bond-Scheme.
  • These are issued by RBI on behalf of Government of India, hence are safe investment options.
  • These gold bonds would be issued on 23rd September, 2016 after subscription is closed. It would be issued in physical form or demat form.
  • Sovereign Gold Bonds are issued in denomination of 1 gram of gold and in multiples of 1 gram with a maximum quantity of 500 grams per person per financial year i.e. Apr to Mar period.
  • These bonds would carry 2.75% interest rate per annum payable semi-annually.
  • Price of the bond would be decided based on the price of the gold pertaining to previous Friday’s rate of 999 purity gold price published by Indian Bullion and Jewellers Association Ltd. The issue price of the sovereign gold bond scheme tranche-5 is fixed Rs 3,150 price per gram.
  • Tenure of the sovereign gold-bond scheme is 8 years. One can exit from these bonds after 5 years from the date of subscription either after completion of 5 years, 6 years of 7 years.
  • You can get loan against the bonds from banks.

How to apply for Sovereign Gold Bond Scheme – Sep-2016 – 5th Tranche?


Bonds can be purchased through banks, Stock Holding Corporation of India Limited, designated post offices, NSE and BSE either directly or through agents.

However, gold bond certificates / demat units would be issued / allocated only on 23rd September, 2016.

Can we withdraw Sovereign Gold-Bonds before the maturity period?


These bonds have a lock in period of 8 years. However, one can do premature withdrawal after completion of 5 years, 6 years or 7 years and during interest date periods. If your interest date is 29th Sep (6 months from 29th March date), you can withdraw after 5 years and on 29th Mar or 29th Sep.

What about the tax treatment of Sovereign Gold Bond Scheme – Sep-2016?


While you would get 2.75% interest per annum on these bonds, this is not tax free. You need to club this interest with your income every year and pay income tax on that based on income tax slab.

These are exempted from capital gain arising from selling these bonds. Means, whatever returns you would get at the time of redemption (apart from interest) is tax free.

Long term capital would be computed for transfer of these bonds to any other person based on indexation benefits.

Also Read: Personal loans Vs Gold Loans – Which one is cheaper?

Are these Sovereign Gold Bonds are traded on stock exchanges?


These are treadable on NSE and BSE. However RBI would notify the date of trading of such bonds at later point of time. Currently these bonds are tradeable from 23rd September, 2016.

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Suresh

Sovereign Gold Bond Scheme – Sep-2016 – 5th Tranche

Suresh KP

12 comments

  1. Sir,
    I applied through ICICI and got message of money deducted today. Will this bond appear in my demat account? or will i need to go to bank to collect some form of receipt?

    1. It should appear in your demat account. However it takes time to get units credited to your account (1-2 weeks). Pls check after 2 weeks in your demat account

  2. Hi Suresh,

    If I buy these bonds from exchange, will the tax implication be the same? I mean if I buy tranche 4 from echange today and keep it till its maturity, will my capital gain is still tax exempt? If I buy tranche 4 from exchange, will I still get 2.75% interest?

    Thanks

  3. Hi Suresh,

    What about if the gold price dropped on 8th year ? Do I still receive my actual principal money invested + 2.75 interest ?

    Regards,
    Karan

  4. Hi Suresh,

    Good day. Hope this finds you in the best of health and spirits. Im 29 years of age and my knowledge on passive income methods are minimal. I stay abroad and over the last couple of years managed to make more than 1.5 crore through active incomes. Offlately I realized I made a blunder by not diverting funds to an NRI account. I assigned my savings towards a normal savings account in India. For all temperory fds I placed, ended up paying tds. Now my questions are as follows: Is there any option to transfer these funds to an Nri account? I presume it is not possible though. My risk apetite is moderate and I may be looking at investing these funds for another 4-5 years. Could you please suggest a best possible plan to maximise my returns (tax efficient) based on your instincts and expertise. Advise in terms of percentages where to invest (like the sovereign gold bond you discussed above.) My knowledge and experiance on shares and mutual funds are zero.

    Regards

    Jay.

    1. I am positive on this Sub rahmanyam. However, it depends on your goal. If you like to accumulate some gold, but worried about gold prices in future, start accumulating every year instead of buying physical gold

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