Sovereign Gold Bond Scheme April 2018 Series-I – Who can invest?
RBI in consultation with Govt. of India has announced that Sovereign Gold Bond Scheme April 2018 Series-I would open today i.e. 16th April, 2018. Sovereign Gold Bond Scheme Price is based on the average price of last week defined by Bullion Association of India and Govt of India offers Rs 50 per gram as discount on this. What are the features of Gold Bond Scheme April 2018 Series-I? How to apply for these bonds? Should you invest in Sovereign Gold Bond Scheme April 2018 Series-I? In this article, I would provide complete review of this.
What is Sovereign Gold Bond Scheme in India?
Indians have been buying gold on all auspicious occasions even though there is no requirement of gold or even if the requirement of gold is there in future considering the price increase in future. In view of that, Govt of India has issued Sovereign Gold Bond Scheme where one can invest in gold in grams, get interest every 6 months and also get equivalent amount of gold on maturity. This is as good as investing in physical gold, but getting interest every 6 months in additional.
Features of Sovereign Gold Bond Scheme April 2018 Series-I
Here are the features of these gold scheme
1) This Sovereign Gold Scheme of Series-I would open for subscription on 16th April, 2018.
2) The gold bond scheme would close for subscription on 20th April, 2018.
3) Resident Indians are eligible to apply for this Sovereign Gold-Bond-Scheme.
4) These are issued by Government; hence these are safe investment options.
5) These gold bonds would be issued on 4th May, 2018 after subscription is closed. It would be issued in physical form or demat form.
6) These bonds would carry 2.5% interest rate per annum, which is payable every half year.
7) Sovereign Gold Bond Price 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 3,114 price per gram and after discount of Rs 50 per gram, this is issued to the general public at Rs 3,064 per gram.
8) 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.
9) Sovereign Gold Bond Scheme is issued in denomination of 1 gram of gold and in multiples of 1 gram. One can buy a maximum quantity of 4 KGs in a financial year i.e. April to March period.
10) You can get a loan against the bonds from banks.
Can we withdraw Sovereign Gold-Bonds before the maturity period?
These gold 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 4th November (6 months from 4th May date), you can withdraw after 5 years and on 4th May or on 4th November.
What about the tax treatment of Sovereign Bond Scheme April 2018 Series-I?
1) 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.
2) 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.
3) Long term capital would be computed for transfer of these bonds to any other person based on indexation benefits. Means, if it is gifted/transferred, person getting it need to pay capital gains tax.
Are these Gold Bonds are traded on stock exchanges?
These are tradable on NSE and BSE. Bond price would depend on few parameters like current gold rates, Interest accrued till date on such bonds etc.
What is the maturity amount for these gold bonds of 2018?
Since you are buying in grams, on maturity, based on gold rate, equivalent amount would be paid to you. E.g. you would have bought 50 Grams of gold. The average prices of gold on maturity (during the previous week of maturity date) assume is Rs 5,000 per gram, you would get Rs 2.5 Lakhs.
How to apply for Sovereign Gold Bond Scheme April 2018 Series-I?
You can buy sovereign gold bond online with any of the banks. Sovereign Gold Bonds are offered by major banks like SBI, ICICI Bank, HDFC etc., Apart from banks, specific Post Offices and Stock Holding Corporation of India are authorized to accept applications under Sovereign Gold scheme. You can approach, fill the application and submit them from 16th April to 20th April, 2018. However, gold bond certificates / demat units would be issued / allocated only on 4th May, 2018.
Who is eligible to invest in Sovereign Gold Scheme of Series-I of 2018?
Following are eligible to invest in Sovereign Gold Scheme of 2018.
1) Resident Indians
2) Corporates / Companies registered in India
3) HUFs / Partnership Firms
Non Resident Indians (NRIs) are not eligible to apply.
Who can invest in Sovereign Gold Bond Scheme April 2018 Series-I?
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 investment appreciation has not given even bank FD rates 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) If you are investing in gold bond scheme for short term gains, you may rethink as gold have been hovering at the same rate for the past few years. Better to invest in short term stocks or short term debt funds which can give better returns.
3) If you are planning to accumulate for future consumption like for ornaments to your spouse or marriage for your daughter, yes, indeed it’s one of the best investment 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 200 grams gold for your daughter marriage in next 10 years, you can invest 20 grams gold in this scheme every year. By the end of 10 years, no matter what gold price is, you are able to accumulate 200 grams.
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Sovereign Gold Bond Scheme April 2018 Series-I