SGB: There is great news for gold investors. In the second half of the current financial year, October 2021-March 2022, the central government will launch four tranches of Sovereign Gold Bonds. In this, the government will also give annual interest at the rate of 2.5 percent on investment. The main reason for launching the SGB is to discourage the import of gold as the trade deficit is imbalanced due to excessive import of gold. There is no tax liability on capital gains from these bonds, which makes it an attractive investment. However, the interest earned annually is taxable.
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here is the timeline
- According to the Finance Ministry, applications for subscribing the first tranche of gold bonds will be accepted between October 25-29. After this, it will be issued to investors on November 2.
- The second tranche will open for subscription between November 29-December 3 and the bonds will be issued on December 7.
- For the third tranche of Gold Bonds, seed applications for January 10-14 will be accepted and the bonds will be issued on January 18.
- In the current financial year, the last tranche of Sovereign Gold Bonds will open for subscription between February 28 – March 4 and then its papers will be issued to investors on March 8.
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Special things related to Sovereign Gold Bonds
- Gold Bond prices will be decided on the basis of average price of gold of 999 purity in the last three working days of the previous week of the subscription period. The Indian Boolean and Jewelers Association (IBJA) publishes the price of gold of 999 purity.
- On online application and payment, investors will get a discount of Rs 50.
- The bonds will be sold through scheduled commercial banks, Stock Holding Corporation of India, Clearing Corporation of India, select post offices, NSE and BSE, except small finance and payments banks.
- Investors will get interest on the nominal value of the investment at the rate of 2.5 per cent per annum every six months.
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- You have to invest at least 1 gram of gold through gold bonds. Apart from this, individuals are allowed to invest a maximum of 4 kg and entities like trusts to invest a maximum of 20 kg in gold bonds in a financial year.
- The tenure of these bonds will be 8 years. However, after holding for five years, you can withdraw your capital on the next interest payment date.
- The redemption price will be determined on the basis of the average closing price of gold of 999 purity in the last three working days published by IBGA.
- The interest earned on investment in bonds will be taxed, but the capital gain on redemption is not taxable for the individual.
- These bonds are also traded on the stock exchange.
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