SGB can be bought by paying the issue price and the bonds will be redeemed on maturity in Indian Rupees based on previous 3 working days simple average of closing price of gold of 999 purity published by IBJA.
Features
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Eligibility:
The bonds are restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions.
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Denomination:
The bonds will be denominated in units of one gram of gold and multiples thereof.
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Minimum Investment:
Minimum permissible investment will be 1 gram of gold.
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Maximum Investment:
Maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time
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Interest rate:
The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually.
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Tenor:
The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates.
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Redemption:
Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
Benefits
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Hassle free:
Ownership of gold in Demat form, without any physical possession(No risks and no cost of storage)
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Tax treatment:
The capital gains tax arising on redemption of SGB to an individual has been exempted.
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Tradability:
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
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Valuable collateral:
Bonds can be used as collateral to obtain a loan from banks
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Transferability:
Bonds shall be transferable by execution of an Instrument of transfer in accordance with the provisions of the Government Securities Act.