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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