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10 Things To Know Before You Invest In Sovereign Gold Bonds April 23 2020Bonds

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10 Things To Know Before You Invest In Sovereign Gold Bonds

What is Sovereign Gold Bond?

Sovereign Gold Bonds are an ideal investment option for individuals who aim to earn returns linked to the price of gold. These bonds are issued by the Reserve Bank of India (RBI) on behalf of the government. The scheme has numerous benefits for an individual out of which one is exemption of the capital gains tax arising on redemption of Sovereign Gold Bonds. However, in case of long term capital gains, individuals get the benefit of indexation on transfer of bond. Besides, Sovereign Gold Bonds can also be pledged as security while availing loans.

For the financial year 2021, the RBI has launched the Sovereign Gold Bond scheme on 20th April and the same will remain open until 24th April. The issue price for the gold bonds has been fixed at Rs. 4,639.

Before applying for the gold bonds here are a few things that you must know.

Top 10 Things To Know Before You Invest In Sovereign Gold Bonds Scheme 2020-21 Series I:

1.     When you apply for gold bonds online by making digital payment, you get a discount of Rs. 50 per gram. In such case, the issue price after discount becomes Rs. 4,589.

2.     The data of recent closing gold price published by Indian Bullion and Jewellers Association Ltd. for gold of 999 purity determines the issue price of gold bonds.

3.     One gram of gold is the minimum permissible investment in gold bonds.

4.     Designated post offices, banks, Stock Holding Corporation of India (SHCIL) and stock exchanges (NSE and BSE) are entitled to sell the gold bonds.

5.     The maturity period of the gold bonds is 8 years. However, you have the option to exit the scheme after the fifth year.

6.   The annual interest on gold bonds is 2.50%. The interest income gets added to your income and taxed accordingly.

7.     From 14 days of the issue, the bonds can be traded in the stock exchanges subject to the liquidity.

8.     The capital gain arising on the gold tax bonds on maturity is tax-free. This benefit of taxation is not available on other forms of investment in gold.

9.     The timeline for the gold bonds that would be issued in the first six months of 2020 are as follows;

·         Series I April 20-24, 2020

·         Series II May 11-15, 2020

·         Series III June 08-12, 2020

10.  You can redeem the bonds before maturity by either approaching the concerned bank, SHCIL offices, post office or agent 30 days prior to the coupon payment date.

Sovereign Gold Bonds is a lucrative investment option. Although, the Coronavirus pandemic has brought the economies of the world to a standstill but RBI still expects a good response to scheme even when there is uncertainty due to COVID-19.

For any further assistance or information, you may get in touch with Indira Securities on our contact numbers - 7970007871, 0731-4797170 or 0731-4797171.

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1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

2. Update your Mobile Number & Email Id with your Stock Broker/ Depository Participant and receive OTP directly from Depository on your Email Id and/ or Mobile Number to create pledge.

3. Pay 20% upfront margin of the transaction value to trade in cash market segment.

4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued by NSE vide. Circular No. NSE/INSP/45191 dated: July 31, 2020 and NSE/INSP/45534 and BSE vide Notice No. 20200731-7, dated: July 31, 2020 and 20200831- 45 dated: August 31, 2020 and dated: August 31, 2020 and other guidelines issued from time to time in this regard.

5. Check your Securities/ MF/ Bonds in the Consolidated Account Statement issued by NSDL/ CDSL every month.


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