Sovereign Gold Bond Issue 20-21 Series IX (Tranche 46) review

Published on Saturday, December 26, 2020 by Dilip Davda | Modified on Saturday, May 15, 2021

RBI has announced another bunch of six SGB schemes for the second half out of which Issue Series IX (Tranche 46) is opening for subscription on December 28, 2020. 

This latest gold bond issue comes at a time when gold prices have marked high volatility. Ongoing marriage season augurs well for this offer.

Schedule for six SGB schemes for the second half of FY21 is as under:

Sr. No. Tranche Date of Subscription Date of Issuance

1. 2020-21 Series VII October 12 - 16, 2020 October 20, 2020
2. 2020-21 Series VIII November 09 - 13, 2020 November 18, 2020
3. 2020-21 Series IX December 28 2020 - January 01, 2021 January 05, 2021
4. 2020-21 Series X January 11-15, 2021 January 19, 2021
5. 2020-21 Series XI February 01- 05, 2021 February 09, 2021
6. 2020-21 Series XII March 01- 05, 2021 March 09, 2021

Sovereign Gold Bond Scheme 2020-21 Series IX-Issue opens for subscription on December 28, 2020 and will close on January 01, 2021. This is the 46^th Tranche of the scheme since its launch.

RBI has announced scheme price for SGB Tranche 46 (series IX) at Rs. 5000 per 1 gram based on the simple average closing price [published by the India Bullion and Jewellers Association Ltd (IBJA)] for gold of 999 purity of the last three business days of the week preceding the subscription period.

Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs. 50/- per gram less than the nominal value to those investors applying online and the payment against the application is made through digital mode. For such investors, the issue price of Gold Bond will be Rs. 4950/- per gram of gold.

Key features

• Minimum investment in the Bonds shall be one gram with a maximum limit of subscribed 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
• 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.
• A fixed rate of 2.5 per cent per annum is applicable on the Sovereign Gold Bond scheme, payable semi-annually.
• Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity for previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.
• The interest on Gold Bonds shall be taxable as per the provision of 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 term capital gains arising to any person on transfer of bond;
• Nomination facility is available up to max. two nominees;
• The securities will be credited in demat accounts of investors after allotment, subject to matching of particulars furnished in the application with the Depositories' records.
• Bonds will be tradable on stock exchanges within a fortnight or on such a date as notified by the RBI.
• Investors can buy these bonds with cash payments up to a maximum cap of Rs. 20000.

CONCLUSION

Investors may consider investing in this offer with a long term perspective as Gold analysts are very bullish on its upward price trends going forward. SGB is considered as the second best investment option with regular yield in the form of interest on investment coupled with benefit of price movement of Gold which has been seen trending up to mark new historic high over the years.