India announces new tranches of Sovereign Gold Bonds

NEW DELHI – The Indian Government, in partnership with the Reserve Bank of India (RBI), has announced the upcoming issuance of Sovereign Gold Bonds (SGBs) in two separate series. The Series III tranche will be available from December 18 to December 22, 2023, with an issuance date set for December 28. Following this, the Series IV tranche will open for subscription from February 12 to February 16, 2024, and will be issued on February 21.

These bonds will be accessible for purchase through select banks (excluding Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), post offices, and recognized stock exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

The SGBs carry an eight-year tenor with an option for early redemption after five years on dates when interest is payable. Investors have the flexibility to buy these bonds using various payment methods including cash (up to ₹20k), demand draft, cheque or electronic banking. The pricing of the bonds is determined based on the average closing price of gold provided by the Indian Bullion Jewellers Association (IBJA) prior to the subscription week. Additionally, subscribers who opt for digital mode or online purchases are entitled to a discount of ₹50 per gram.

Investors in SGBs receive a semi-annual interest at a rate of 2.50%, which is subject to tax under current regulations. However, capital gains arising from redemption are exempt from tax under the provisions of the Income Tax Act. For long-term capital gains arising from transfers, indexation benefits are applicable.

The government has set annual investment limits for these bonds at four kilograms for individual investors and Hindu Undivided Families (HUFs), and 20 kilograms for trusts and other entities. This initiative is part of a broader strategy by the Indian Government to offer alternative forms of investment in gold and to reduce physical demand for the precious metal.

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