Srinagar, Apr 17: As the investment landscape evolves, the government has introduced innovative avenues for investors, one of which is the Sovereign Gold Bond (SGB). Below are answers to key questions elucidating the nature, benefits, and procedures associated with SGBs:
- What is a Sovereign Gold Bond (SGB), and who issues it?
SGBs are government securities denominated in grams of gold, serving as substitutes for physical gold. The Reserve Bank of India (RBI) issues these bonds on behalf of the Government of India.
- Why choose SGB over physical gold, and what are the benefits?
SGBs assure investors of market price protection upon redemption, eliminating storage risks and costs associated with physical gold. Moreover, they provide periodic interest payments, free from making charges and purity concerns.
- What are the risks associated with investing in SGBs?
While investors may face capital loss if gold prices decline, they do not lose the units of gold for which they paid.
- Who is eligible to invest in SGBs?
Individuals, Hindu Undivided Families (HUFs), trusts, universities, and charitable institutions resident in India, as per the Foreign Exchange Management Act, 1999, are eligible.
- Are joint holdings permitted?
Yes, joint holding is allowed for SGB investments.
- Can minors invest in SGBs?
Yes, minors can invest, with applications made by their guardians.
- Where can investors obtain application forms?
Application forms are available at issuing banks, SHCIL offices, and designated Post Offices, and can be downloaded from the RBI’s website.
- What are the Know-Your-Customer (KYC) norms?
Every application must be accompanied by the investor’s PAN number.
- Can investors hold multiple investor IDs for SGB subscriptions?
No, investors can only have one unique investor ID linked to prescribed identification documents.
- What are the minimum and maximum investment limits?
Bonds are issued in denominations of one gram of gold, with a minimum investment of one gram and a maximum limit per fiscal year (April – March) varying based on the investor category.
- Can family members individually purchase SGBs up to the maximum limit?
Yes, each family member can buy bonds individually if they meet eligibility criteria.
- What is the rate of interest and how is it paid?
Bonds bear a fixed interest rate of 2.50% per annum, paid semi-annually, with the last interest payable on maturity along with the principal.
- Who are the authorized agencies selling SGBs?
Bonds are sold through various financial institutions, stock exchanges, and designated Post Offices.
- Is tax deducted at source (TDS) applicable on SGBs?
No, TDS is not applicable, but investors must comply with tax laws.
- How can investors contact RBI for SGB-related queries?
Investors can email their queries to a dedicated RBI email address.
For further information and assistance, investors are encouraged to explore the comprehensive guidelines provided by the RBI and consult with authorized agencies.