The government launched the Sovereign Gold Bond Scheme FY19 on Monday with an aim to down gold imports and lower the current account deficit. The Gold Bond would preserve the incentives offered in the earlier tranche-of 2.5% interest rate and capital gains tax arising on redemption of the SGB to a person has been exempted.
The Ministry of Finance shared in a statement that the gold bond would be available under the SGB or Sovereign Gold Bonds scheme 2018-19. It further stated that schemes were government securities, denominated in grams of gold that would provide a new way of investment to the investors through a yellow metal without spending money on the precious metal in physical form.
It further added that the per unit price of gold bonds would be influenced by the market value of gold and it would be redeemed in cash on maturity.
The new sovereign gold bond would be available in banks, Stock Holding Corporation of India Ltd, designated post offices and recognized stock exchanges from October 2018 to February 2019. The maturity period of the bond will be of eight years with exit option in the fifth, sixth and seventh year.
The statement stretched the detail that one can purchase the bond by paying through demand draft, cheque and electronic banking but cash payment was restricted up to a maximum of ₹ 20,000.
An investor can purchase a maximum limit of 4 kilograms in case of individuals and HUFs in a financial year where upper limit set in case of a trust or similar organisation is set to 20 grams per fiscal year.
The statement released even shared that annual ceiling includes bonds subscribed under different tranches in the initial issuance and includes those which are purchased from the secondary market.
The new gold scheme can be accessed by individuals, trusts, universities and charitable institutions and HUFs (Hindu Undivided Families)