Sovereign Gold Bonds 2015 – Should you subscribe?
Two days back, Govt. of India has issued notification about Sovereign Gold Bonds 2015 on how to apply for the scheme now. These Sovereign Gold-Bonds 2015 would open for subscription from 5th November and would get closed on 20th November, 2015. What are the features of Sovereign Gold Bond Scheme 2015? How to apply for these bonds? Can we redeem these bonds before the maturity dates?
Also Read: Ways to check purity of gold jewellery
Features of Sovereign Gold Bonds 2015
- These bonds would open for subscription from 5th November, 2015 and closes on 20th November, 2015. Govt. of India can choose to close this scheme earlier based on the demand.
- Resident Indians are eligible to apply for these Sovereign Gold-Bond-Scheme.
- These are issued by Govt. of India, hence safe for investment.
- These gold bonds would be issued on 26th November, 2015 after subscription is closed. It would be issued in physical certificate form or in demat form.
- Sovereign Gold Bonds are issued in denomination of one gram of gold and in multiples of one gram with a maximum subscription of 500 grams per person per fiscal year i.e. Apr to Mar period.
- These bonds would carry 2.75% interest rate per annum which is payable every half year.
- 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.
- Tenure of the sovereign gold-bond scheme is 8 years.
- You can get loan against the bonds from banks.
How to apply for Sovereign Gold Bonds 2015?
Scheduled Commercial Banks and designed Post Offices are authorized to accept applications under Sovereign Gold bond scheme. You can approach, fill the application and submit them between 5th November to 20th November, 2015. However, gold bond certificates / demat form would be issued only on 26th November, 2015.
Can we withdraw Sovereign Gold-Bonds before maturity period?
Tenure of these bonds are 8 years. However, one can do pre withdrawal after completion of 5 years and during interest date period. If your interest date is 26th May (6 months from 26th November date), you can withdraw after 5 years and on 26th May or on 26th November.
What about the tax treatment of Sovereign-Gold Bond Scheme of 2015?
There are two points in tax aspect.
- 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.
- For any capital gain arising from sale of these bonds after 5 years either directly by surrending these bonds or trading on trading platform, you need to pay capital gain tax. This tax treatment is like tax treatment for physical gold.
Are these Sovereign Gold Bonds are traded on stock exchanges?
These bonds are tradeable, however RBI would notify the date from which, these bonds would be traded.
Conclusion: Whether to invest in these bonds or not would depends on your need. If you want to invest in physical gold now, either for your daughter marriage or for future price appreciation, you would not earn any money from such gold accumulation from today till the time you need. Sovereign gold bond scheme offers 2.75% returns per annum apart from retaining the value of gold in future. Hence if you invest this for 8 years period, you would get 22% additional value of gold at the end of the tenure. Many bloggers has negative view about this scheme. If I invest for 10 grams now in gold and after 8 years, my gold is still valued at 10 grams only. However If I invest 10 grams of gold value in sovereign gold bonds scheme, my value would be 10 grams at end of the tenure + 22% value would be appreciated at the end of the tenure.Hence I feel this is best bet.
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Sovereign Gold Bonds 2015