Next tranche of sovereign gold bonds scheme from Nov 5

The government will launch the next tranche of sovereign gold bonds scheme on November 5. "The issue price of the bond during this subscription period i.E. November 5-9, 2018, shall be Rs 3,183 per gram with settlement on November 13, 2018, as also published by RBI in the Press Release dated October 12, 2018," an official statement from the Finance Ministry said. 

It has also been decided to allow discount of Rs 50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors, the issue price of gold bonds will be Rs 3,133 per gram of gold.

The sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings - used for the purchase of gold - into financial savings.

Under the scheme, the bonds are denominated in units of one gram of gold and multiples thereof. Minimum investment in the bonds is one gram with a maximum limit of subscription of 500 grams per person per fiscal year.

The maximum limit of subscription is 4 kg for individual and HUF and 20 kg for trusts and similar entities per fiscal (April-March). The RBI said the payment for the bonds would be through cash, maximum of Rs 20,000, demand draft, cheque or electronic banking.

The bonds are eligible for conversion into demat form and can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time. The interest on gold bonds would be taxable.

"The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on the transfer of bond," RBI said.

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Know Your Customer (KYC) norms would be the same as that for the purchase of physical gold and every application must have PAN number of the investor.