Want to invest in Sovereign Gold Bonds? All your FAQs answered here

Gold has been one of the most traditional and loved investments in India. You can invest in Gold in either physical form or gold ETFs. Additionally, there is the government run Sovereign Gold Bond, wherein the Reserve Bank of India issues bond on behalf of the Government of India. In other words, the scheme lets the investors invest in gold without having to hold it in a physical form. Here is what you need to know about Sovereign Gold Bonds -

Who is eligible for Sovereign Gold Bond?

Any Indian resident, individual, trusts, HUFs, charitable institutions and universities are eligible to invest in Sovereign Gold Bond. One can also invest in the scheme on behalf of a minor. 

What is the maturity period with the Sovereign Gold Bond?

The Sovereign Gold Bond comes with maturity period of eight years. One also has the choice of exiting the bond after completing the fifth year. 

What is the investment limit with the Sovereign Gold Bond?

For the scheme, the minimum amount of gold investment is one gram with a maximum limit of 4 gram. The latter is applicable for individual investors and HUFs. In case of trusts and other entities, the maximum limit of investment is 20 kilograms. 

What is the interest rate with the Sovereign Gold Bond?

The interest rate for Sovereign Gold Bond is currently 2.50% annually. The interest is paid twice a year. The returns on the bond is linked to the current market price of gold.

Payment

The investor can pay either by cash (only up to Rs 20,000), DD or cheque. However, online payments will be charged Rs 50 as service charge.

What is the documentation required for the Sovereign Gold Bond?

The interested investor needs to provide with their Know-your-customer (KYC) norms. The KYC documents include PAN card, Aadhaar card, Voter Id etc. 

Tax treatment on Sovereign Gold Bond

Investment with Sovereign Gold Bond or SGB will be taxed according to the income tax laws. However, the capital gains tax arising on the redemption of SGB to an individual has been exempted. Proceeds from Sovereign Gold Bond are not subject to tax deducted at source or TDS. 

Tradability on Sovereign Gold Bond

One can trade on Sovereign Gold Bond on stock exchange within a specific date, as notified by the RBI.