Gold bonds to be launched on Nov 5, at 2.75% interest

The Government has announced that Sovereign Gold Bonds will be issued from November 26. The Sovereign Gold Bonds will offer an interest rate of 2.75 per cent and will remain open for public subscription from 5 Nov to 20 Nov 2015. 

Details about Sovereign Gold Bonds:-

• Applications for the bond will be accepted from November 5, 2015 to November 20, 2015.
• The bonds will be issued on November 26, 2015.
• The bonds will be sold through banks and designated post offices as may be notified.
• The gold bond scheme will offer investors a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams.
• The tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.
• Price of bond will be fixed in Indian Rupees on the basis of the previous week's (Monday Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd.  The same procedure would be followed for calculating the redemption price for the bonds.
• Interest on bonds have been fixed at 2.75 per cent per annum payable semi-annually on the initial value of investment.
• The interest on gold bonds will not be tax free. It will be taxable as per the Income Tax Act, 1961 and capital gains tax shall be levied as in case of physical gold.
• The bonds can be used as collateral for loans and 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 bonds will be restricted for sale to resident Indian entities including individuals, HUFs, trusts, universities and charitable institutions.