Sovereign Gold Bond scheme: All you need to know before investing in it

The Sovereign Gold Bond scheme offers an alternative to holding gold in physical form.

Investors bidding for the fourth tranche of the Sovereign Gold Bond scheme will get an interest of 4 per cent annually for the period funds are transferred from clearing corporations to the Reserve Bank of India (RBI).

The subscription, which started on July 18, will be open till July 22, and is aimed at attracting large number of investors so as to curb demand for physical gold that is imported in large quantities draining the country’s foreign exchange.

Here are the key things to know:

* Minimum investment under the Gold Bond scheme is one gm

* Maximum investment under the Gold Bond scheme is 500 gm

* Interest to be obtained under the Gold Bond scheme is at a fixed rate of 2.75 per cent payable every six months

* The bonds are tradable through stock exchanges – NSE and BSE

* The Gold Bond scheme is available in DEMAT and paper form

* The Gold Bond scheme has a tenure of eight years, with exit options in the 5th, 6th and 7th year

* At time of exit the bond can be redeemed at market rate of gold

* The gold bond can be used as collateral to avail a loan

* Capital gain tax will be exempted on redemption

* Investing in the Gold Bond scheme helps as there will be zero risk from handling physical gold

* You can buy the bond at all bank branches, select post offices, through Stock Exchange – BSE and NSE as well as Stock Holding Corporation of India.

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