Sovereign Gold Bond Scheme July 2017 Tranche-II – Who can invest?

Sovereign Gold Bond Scheme July 2017 Tranche-IISovereign Gold Bond Scheme July 2017 Tranche-II – Who can invest?

Govt. of India announced that Sovereign Gold Bond Scheme 2017 Tranche-II (Series 2) would open today i.e. 10th July, 2017. Govt. of India offers Rs 50 per gram discount based on the average price of last week defined by Indian Bullion Association. What are the features of Sovereign Gold Bond Scheme July 2017 Series II – Tranche II? How to apply for these bonds? Should you invest in Sovereign Gold Bond Scheme July 2017 Tranche-II? In this article, I would provide complete review of this.

Also Read: Bullion India platform – Is this safe for gold investments?

Features of Sovereign Gold Bond Scheme 2017 Tranche-II

Here are the features of Soveriegn Gold Bond scheme.

  • These Sovereign Gold Bond Scheme of July 2017 would open for subscription from 10th July, 2017 and closes on 14th July, 2017.
  • Resident Indians are eligible to apply for this Sovereign Gold-Bond-Scheme.
  • These are issued by Government, hence these are safe investment options.
  • These gold bonds would be issued on 28th July, 2017 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 2.5% 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. They have fixed Rs 2,830 price per gram  and after discount of Rs 50 per gram, this is issued to the general public at Rs 2,780 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 a loan against the bonds from banks.

How to apply for Sovereign Gold Bond Scheme July 2017 Tranche-II?

Banks, specific Post Offices and Stock Holding Corporation of India are authorized to accept applications under Sovereign Gold bond scheme. You can approach, fill the application and submit them between 10th July, 2017 to 14th July, 2017. However, gold bond certificates / demat units would be issued / allocated only on 28th July, 2017.

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 28th Jan (6 months from 28th July date), you can withdraw after 5 years and on 28th July or on 28th Jan.

What about the tax treatment of Sovereign Gold Bond Scheme July 2017 Tranche-II?

While you would get 2.5% 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.

1) 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.

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

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Are these Sovereign Gold Bonds are traded on stock exchanges?

These are tradable on NSE and BSE. However RBI would notify the date of trading of such bonds at later point of time.

Sovereign Gold Bonds 2017-2018 Tranche-I is trading at Rs 2,712 on NSE as on 8th July, 2017. Bond price would depend on few parameters like current gold rates, Interest accrued till date on such bonds etc.,

Who can invest in Sovereign Gold Bond Scheme July 2017 Tranche-II?

You need to question yourself for few things, if you are planning to invest in such bonds.

1) What is the purpose of investing in such gold? If you are looking for future appreciation and for long term investment purpose, then you may rethink about your decision. Gold has not given even bank FD returns in the last couple of years. Better to go for some of the top performing mutual fund schemes which can give you 12% to 15% annualized returns.

2) Are you investing in gold bond scheme for short term gains, no way. You would waste your money and effort. Better to invest in Best GST stocks or any other short term stocks that can appreciate in short to medium term.

3) If you are planning to accumulate for future consumption like for ornaments to your spouse or daughter marriage, yes, indeed it’s one of the good options. No one can predict the gold rates. Hence investing small amounts in such schemes can help you to accumulate gold grams over a period of time. E.g. you want to accumulate 100 grams gold for your daughter marriage in next 10 years, you can invest 10 grams gold worth amount in this scheme every year. By the end of 10 years, no matter what gold price is, you are able to accumulate 100 grams.

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Sovereign Gold Bond Scheme July 2017 Tranche-II – Who can invest

Suresh KP



    Sovereign Gold Bond (SGB) though attracted large no. of investors initially, proved as least preferred investment option for individual investor at large.


    Benefits offered:

    Discount of Rs.50/- on face value at the time of issue

    NIL Capital Gain Tax

    Long Term Capital Gain Indexation Benefits

    Price will move in line with Gold

    Maturity surety : Govt. will buy back after 8 years at the then prevailing gold market price.

    Interest Rate : 2.5% – 2.75%

    Listed on NSE for trading


    Challenges faced by individual investor:

    Illiquid market: Very low /negligible/ NIL trading volume

    Negative / Low Return: Only 2 out of 14 tradable SGBs are giving positive return with CAGR of 3%-5%. (Rest of the SGBs are traded in red).

    Sentiments: Equity market is bullish, hence, no one would be keen to SGBs even at Discount.

    My View: Even after such shortcoming, SGBs are good options to invest as Gold prices moved upward with CAGR of 10.8% since 2007 to 2017.

  • Subhajit Saha

    HI Suresh,

    This year I've invested in SGB with limpsum amount. I invested thorugh online axis pay in physial bond also got confirmation latter from bank with application number. Is there any chances that I can get into a trouble like Ramesh.

  • yakesh

    Very good blog. I really liked the way you are explaining about different investiment options in a  simple manner.

  • Akshay

    Hello sir,

    In this bull run of equity, is there a chance to buy gold for portfolio diversification.

    Like buying gold bonds from secondary market?

  • Ramesh

    Hi Suresh, I had invested in the SGB with a lumpsum amount during Sep 2016. The amount was debited from my ICICI Bank a/c during Sep itself. However I have not received allotment letter or any other document/confirmation for my investment. ICICI Bank seem unable to help. Any idea whom should I approach? Any specific email id's or other contact details?

    • Have you checked your email + demat account. These would have been allocated in demat form and it should be in your demat account. Pls check. You should contact ICICI Bank as they have processed the payment.

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