Govt. announces Series I and II of Sovereign Gold Bond (SBG) Scheme 2022-23
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- Last Updated on 18 June, 2022
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Circular no. RBI/2022-23/72 IDMD.CDD. No.S789/14.04.050/2022-23
The RBI has announced Series I and II of the Sovereign Gold Bond Scheme 2022-23. The Sovereign Gold Bonds (SGBs) will be sold through SCBs, Stock Holding Corporation of India Ltd., Clearing Corporation of India Ltd., designated post offices, and Stock exchanges. The investors of SGB scheme are compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. The redemption price of SGB will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA Ltd. This write up aims to provide the information w.r.t. SGB scheme 2022-23 in a simple Q&A format as under:
1. Who is eligible to purchase Gold bonds under the SGB scheme?
The SGBs will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
2. What is the unit of denomination for SGB?
The SGBs will be denominated in multiples of gram(s) of gold with a basic unit of one gram.
3. What is tenure of SGB?
The tenor of the SGB will be for a period of 8 years with an option of premature redemption after the 5th year.
4. What is minimum and maximum permissible investment limit for SGB?
Minimum permissible investment will be One gram of gold. The maximum limit of subscription shall be 4 Kg for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March) notified by the Government from time to time.
A self-declaration to this effect will be obtained. The annual ceiling will include SGBs subscribed under different tranches, and those purchased from the Secondary Market, during the fiscal year.
5. What are provisions for Joint holder?
In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
6. What will be issue price of SGB?
Price of SGB will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited (IBJA) for the last three working days of the week preceding the subscription period. The issue price of the SGBs will be less by `50 per gram for the investors who subscribe online and pay through digital mode.
7. Whether certificate of holding will be issued against SGBs?
The SGBs will be issued as Government of India Stock under Government Securities Act, 2006. The investors will be issued a Certificate of Holding for the same. The SGBs will be eligible for conversion into demat form
8. What are payment options under SGB scheme?
Payment for the SGBs will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
9. What will be redemption price for SGB?
The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous three working days published by IBJA Ltd.
10. What are the KYC norms and documents required under SGB scheme?
Know-your-customer (KYC) norms will be the same as that for the purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
11. What is Tax treatment on SGB?
The interest on SGBs shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of the SGB.
12. Can SGBs be used as collateral for loans?
The SGBs 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.
13. Whether SGB acquired by banks would count for SLR eligibility?
The SGBs acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio
14. What are norms for Commission for distribution of the SGB?
Commission for distribution of the SGB shall be paid at the rate of 1 percent of the total subscription received by the receiving offices and receiving offices shall share at least 50 percent of the commission so received with the agents or sub-agents for the business procured through them.
Click Here To Read The Full Circular
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4 thoughts on “Govt. announces Series I and II of Sovereign Gold Bond (SBG) Scheme 2022-23”
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Hello,
I’m located in Canada and I did invest in SGB some time ago when I bought SGB via Lobstr wallet paying with Stellar XLMs. Could you please clarify for me if there is any way to provide my KYC data so that I can be registered as a legal investor in your SGB scheme 2022-2023?
Thank you.
Hi Florian, Know-your-customer (KYC) norms will be the same as that for the purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
Please pay attention to the article. The key aspect of interest payment at 2.5% is not mentioned.
Hi Mr, Subbu. Thank you for highlighting this. To keep blog short and simple, it is not possible to covering each and every aspects of a topic. However, we will make sure that all key aspects has been duly mentioned in the blog.