Sovereign Gold Bonds (SGB)

SGBs are government securities denominated in grams of gold.
They are an alternate to holding physical gold.
SGBs are issued by RBI on behalf of the Government of India.

SGBs offer investors with a range of benefits, such as

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.
No risks and costs of physical storage.
No making charges and purity issues
Earn interest at 2.5% per year on the initial investment.& Interest is credited twice a year.

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 that he/she has paid for.

All Indian residents as defined under Foreign Exchange Management Act, of 1999 are eligible to invest in SGBs.
Eligible investors include individuals, HUFs, trusts, universities and charitable institutions.

Yes, joint holding is allowed.

Yes. The application on behalf of the minor has to be made by his/her guardian.

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 limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April-March).
In case of joint holding, the limit applies to the first applicant.
The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions.

The Bonds bear interest at the rate of 2.50% (fixed rate) per annum on the amount of initial investment.
Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
There will be no capital gain tax at maturity.

The nominal value of Gold Bonds shall be in Indian Rupees fixed 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 3 business days of the week preceding the subscription period.

The price of gold for the relevant tranche will be published on the RBI website two days before the issue opens.

On maturity, the Gold Bonds shall be redeemed in Indian Rupees and 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.

Interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, the maturity proceeds will be credited to the registered bank account.

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after the fifth year from the date of issue.
The bond can be traded on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

The bond can be gifted/transferred to a relative/friend/anybody who fulfills the eligibility criteria

TDS is not applicable to the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

The bonds are tradable from a date to be notified by RBI. (It may be noted that only bonds held in demat form with depositories can be traded on stock exchanges)

The bonds can also be sold and transferred as per provisions of Government Securities Act, 2006. Partial transfer of bonds is also possible.