The second tranche of the sovereign gold bond scheme 2021-22 opens for subscription on Monday (August 22) and will remain open for the next 5 days, as per the notification issued by the Reserve Bank of India (RBI). The issue price has been fixed at ₹5,197 per gramme of gold, which is ₹106 more than the first series announced in June this year. The price of the first tranche of the sovereign gold bond was ₹5,091 per gramme.

“The Sovereign Gold Bond Scheme 2022-23 - Series II will be open for subscription for the period from August 22 – August 26, 2022,” the RBI said in a release issued on August 19.

“The nominal value of the bond based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three working days of the week preceding the subscription period, i.e. August 17, August 18, and August 19, 2022 works out to ₹5,197 per gramme of gold,” the release noted.

As per the release, the central government, in consultation with the RBI, has decided to offer a discount of ₹50 per gramme less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of gold bond will be ₹5,147 per gramme of gold.

Here’s all you need to know about sovereign gold bond scheme:

About scheme

Sovereign Gold Bond (SGB) scheme was launched by the central government in November 2015, under gold monetisation scheme. These are government securities denominated in grams of gold and are the perfect alternative to investment in physical gold. These bonds, issued by the RBI on behalf of the Government of India, also eliminate several risks associated with physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.

Eligibility to invest in the SGBs

Person resident in India is eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

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 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 the case of joint holding, the limit applies to the first applicant.

Rate of interest

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.

Tenor of investment

The tenor of the SGB will be for a period of eight years with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.

How to get application form

The application form will be provided by the issuing banks/SHCIL offices/designated Post Offices/agents. It can also be downloaded from the RBI’s website. Banks may also provide online application facilities.

Tax implications

Interest on the bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.

Payment options

Payment can be made through cash (upto ₹20,000)/cheques/demand draft/electronic fund transfer. A customer can apply online through the website of the listed scheduled commercial banks. The issue price of the gold bonds will be ₹50 per gramme less than the nominal value to those investors applying online and the payment against the application is made through digital mode.

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