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Sovereign Gold Bonds- March 2016 Series-II (3rd Tranche) – Details and Review

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Sovereign Gold Bonds- 2016 Series-II (3rd Tranche)

The investment in Sovereign Gold Bonds, 2016  is now open for subscription from March 8, 2016 to March 14, 2016. (Government of India vide its Notification F.No. 4(19)-W&M/2014 dated March 04, 2016).  The bonds will be issued on March 29, 2016.

The issuance of Sovereign Gold Bonds in this tranche will be done at Rs 2,916 /gm of gold.

This is the 3rd time, the subscription is open for Sovereign Gold Bonds (SGB).  Previous subscription:  

  • In Nov 2015 (Issue price – Rs 2684 / gm)  – got subscription for 915.95 kg of gold worth Rs 246 crore
  • In Jan 2016 (Issue price – Rs 2600 / gm)  – received subscription for 3,071 kg gold amounting to Rs 798 crore. 
In my previous post, I have provided more details around Sovereign Gold Bonds 0 its features, merits, demerits, taxation aspects etc.

Sovereign Gold Bond Scheme – Should you invest in SGB?

http://wealth18.com/sovereign-gold-bond-scheme-should-you-invest-in-sgb/

Main Features of the Sovereign Gold Bonds scheme

The Bond is issued by Reserve Bank on behalf of Government of India.

  • For each gram of gold, you can buy 1 unit of SGB.  The rate is fixed by the government at the time of issuing the bond
  • You will get interest @ 2.75% p.a. Interest is paid every six months.
  • On maturity, you will get the price of gold at that point of time
  • The bonds will mature in 8 years. However, the investors have an option to exit after the 5th This means, after 5 years, you will have an option to sell it back to the Government.
  • At the time of investment, there is no tax benefit at the time of investment. Interest Income is taxable as per your tax slab.
  • No Capital Gains Tax – if you hold the bonds till maturity and then redeem the bonds. However, if you sell these bonds in the secondary market, you will have to pay capital gains tax. Short term gains (holding period <= 3 years) shall be taxed at the marginal income tax rate (as per income tax slab of the investor). Long Term Capital Gains shall be taxed at 20% less indexation.

Should you invest in these Sovereign Gold Bonds scheme

You can invest in these gold bonds to diversify your portfolio. However, you should not allocate more than 5-10% of your long term investment. 

RBI Notification

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10298&Mode=0

 

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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About wealth18

The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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