These gold bonds are issued by the Reserve Bank of India (RBI) on behalf of the central government. These offer a fixed interest rate of 2.5 percent per annum, which is paid on half yearly basis. On maturity, final interest is given along with the principal amount. SGB The second part will be available between September 11 and 15. SGB was launched by the government about eight years ago under the Gold Monetization Scheme. In this scheme guaranteed by the Central Government, Hindu Undivided Families (HUF), charitable institutions, trusts, universities or individuals living in the country can buy gold bonds.
SGB can be purchased from Commercial Banks (except Small Finance Banks), Payment Banks, Regional Rural Banks and Stock Holding Corporation of India Limited (SHCIL). This purchase can be done directly through stock exchanges or through agents. Sovereign Gold Bond was introduced to reduce the demand for physical gold. Its objective is also to invest the savings used in buying gold into financial savings. This scheme has a lock-in period of eight years. However, exit options are available from the fifth year onwards. There is an option to exit the scheme before the stipulated maturity date on the interest payment dates.
Tax has to be paid on the interest received in this scheme. Under the rules of the Income Tax Act, long-term capital gains arising on transfer of SGBs are eligible for indexation benefits. The popularity of this scheme has increased in the last few years. In this, participation of institutional investors as well as individual investors has also increased. However, despite this, the demand for gold has not been affected much. Investors in this scheme have also benefited from the rise in gold prices in the last few years.
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