Sovereign Gold Bonds FAQs
Sovereign Gold Bonds
How will I get the redemption amount?
Both interest and redemption proceeds will be credited to the bank account number furnished in the application form.
What are the limitations for applying to Sovereign Gold Bonds online through ICICI Bank Internet Banking?
Only single holding mode is allowed and in case of application through a Joint account, the bond is issued on the name of Primary Account holder.
Are there any risks in investing in SGBs?
There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.
What are the tax implications on i) interest and ii) capital gain?
Interest on the bonds will be taxable as per the provisions of the Income-tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Why should I buy SGB rather than physical gold? What are the benefits?
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in Demat form, eliminating risk of loss of scrip etc.
What is the minimum and maximum limit for investment?
The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the bond shall be one gram with a maximum buying limit maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities per fiscal year as notified by the government from time to time provided that
- annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market; and
- the ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.
What is Sovereign Gold Bonds (SGB)? Who is the issuer?
SGBs are Government Securities denominated in grams of gold. They are substitutes for holding physical gold. The Bond is issued by Reserve Bank on behalf of Government of India.
Who is eligible to invest in the SGBs?
The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions. For online application through ICICI Bank, the bonds are for sale to only individuals through the Internet Banking Channel and iMobile App. Customers falling into other category of investors may however approach the branch and fill-up the application form to apply for the tranche.
Can a Minor invest in SGB?
Yes. The application on behalf of the minor can be made by his / her guardian through a branch. Minor account holders cannot apply for SGB in the online mode.
Can I buy 4Kg in the name of each of my family members?
Yes, each family member can hold the bond if they satisfy the eligibility criteria for investing in Sovereign Gold Bond.
Where can investors get the application form?
Investors can apply for the bonds online through ICICI Bank Internet Banking and iMobile App or through branches during the subscription period.
When will the customers be issued Holding Certificate?
The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the branches or is sent directly to e-mail ID from RBI, if the e-mail ID is provided in the application form.
Is the maximum limit of 4 Kg applicable in case of joint holding?
The maximum limit will be applicable for the first applicant in case of a joint holding for the specific application.
What will I get on redemption?
On maturity, the redemption proceeds will be equivalent to the prevailing market value of grams of gold originally invested in Indian Rupees. The redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
Can I get the bonds in demat form?
The bonds can be held in the Demat account. For this, the applicant has to mention the details of DP ID and DP Client ID in the application form.
At what price the bonds are sold?
Price of the Bonds shall be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewelers Association Limited for the last three business days of the week preceding the subscription period. The issue price of the Gold Bonds will be ₹ 50 per gram less than the nominal value to those investors applying online.
Can I buy 4Kg worth of SGB every year?
Yes. An individual can buy 4Kg worth of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis.
What is the rate of interest and how will the interest be paid?
The interest and price will be notified by RBI at the time of issuance. Interest will be credited semiannually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
How can I Invest Online in Sovereign Gold Bond?
Individual customers can invest online by following these steps:
- Login to Internet Banking> Investments & Insurance> Invest Online> Sovereign Gold Bond
- Login to iMobile app> Mutual Fund, Insurance & Tax Payment> Sovereign Gold Bond
Is tax deducted at source (TDS) applicable on the bond?
TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.