The Sovereign Gold Bond Scheme 2020-2021

Apr 14, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on April 13, 2020, has decide to issue the Sovereign Gold Bonds from April 2020 to September 2020. The bonds will be issued by Reserve Bank India on behalf of the Government of India and will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions. There will be a distinct series for every tranche which will be indicated on the Bond issued to the investor. The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges like National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the interest payment dates.

The maximum limit of subscription shall be 4 Kg for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market. The payment for the bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.

The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961. The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

This Notification shall come into force on the date of its publication in the Official Gazette.


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