Edited By: Mohammad Haris
Last Updated: March 01, 2023, 13:00 IST
The SGB provides a substitute for holding gold in bodily type. (Representative picture)
RBI has supplied the date for submitting the request for untimely redemption and the date of coupon fee, aside from the difficulty date and SGB Series
The Reserve Bank of India (RBI) has fastened dates for the untimely withdrawal of a number of tranches of sovereign gold bonds (SGB). In a press launch, the central financial institution has supplied the date for submitting the request for untimely redemption and the date of coupon fee, aside from the difficulty date and SGB Series.
“In phrases of Para 13 of the Consolidated Procedural Guidelines on the Sovereign Gold Bond (SGB) Scheme issued by the Reserve Bank of India vide round IDMD.CDD.1100/14.04.050/2021-22 dated October 22, 2021, untimely redemption of the gold bonds is permitted after 5 years from the date of subject of such bonds,” the RBI said in the release on Tuesday, while providing the details of tranches falling due for premature redemption during the period April 01, 2023 to September 30, 2023.
What Is Premature Withdrawal?
Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.
What Do I Have to Do for Premature Redemption?
In the case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.
What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. The SGB offers an alternative to holding gold in physical form.
Who is eligible to invest in the SGBs?
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.
What are the tax implications on i) interest and ii) capital gain?
Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.
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