The Government of India launched its Sovereign Gold Bond 2016-17 Series III (SGB) from 27 Feb to 3 Mar 2017. Issue price for the Sovereign Gold Bond for this tranche has been fixed at Rs. 2,893 per gram.
Issue Details
| Gold Bond | Sovereign Gold Bond 2016-17 Series IV |
|---|---|
| Issue Open | 27 Feb 2017 |
| Issue Close | 03 Mar 2017 |
| Issuance | Reserve Bank of India on behalf of Govt of India |
| Tenor | 8 Years (Exit option from 5th year) |
| Price Band | Rs. 2,893 per gram |
| Maximum Limit | 500 grams per person per fiscal year (Apr-Mar) |
| Interest Rate | Fixed Rate 2.50% per annum payble semi-annually on the initial value of investment |
| Collateral | Bond can be used as collateral for loans. |
| Tradability (Liquidity) | Bonds will be tradable on Exchange |
| Tax Treatment | The Interest on Gold Bonds shall be taxable. The capital gain tax arising on redemption of SGB to an individual has been exempted. |
| Indexation | The Indexation benefits will be provided to long term capital gains arising to any person on transfer of bond. |
Comparison
Comparision of Physical Gold, Gold ETF & Sovereign Gold Bond 2016-17 Series III :
| Physical Gold | Gold ETF | Sovereign Gold Bond | |
|---|---|---|---|
| Returns | Lower than Actual Return on gold | Lower than Actual Return on gold | Higher than Actual Return on gold |
| Safety | Risk on handling physical gold | High | High |
| Purity of Gold | Purity of gold always remains a question | High as it Electronic Form | High as it Electronic Form |
| Wealth Tax | Wealth Tax applicable @ 1% on the total valuation of the asset every year | Not Applicable | Not Applicable |
| Capital Gain | Long term Capital Gain Tax applicable after 3 years | Long term Capital Gain Tax applicable after 3 years | Long term Capital Gain Tax applicable after 3 years ( No Capital Gain Tax if held till maturity) |
| Collateral Against Loan | Yes | No | Yes |
| Storage Cost | High | Very low | Very low |
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