Sovereign Gold Bond Scheme from Kotak Mahindra Bank

Sovereign Gold Bond Scheme from Kotak Mahindra Bank are RBI issued securities which are denominated in grams of gold. Since these are substitutes of physical gold people have to invest in these bonds in cash and after redemption receive only cash.

In 2015, the Government of India announced the Sovereign Gold Bond Scheme which was opened for subscription from November 2015. The issuer will be the Reserve Bank of India, on behalf of the Government of India. The price of issue for this scheme was fixed at Rs. 2,684 per gram, and was decided upon the earlier week’s closing price. So what is the gold bond scheme and who issues these bonds? The Sovereign Gold Bonds are securities issued by the government in the measure of gold in grams. They work as substitutes for physical gold. The individuals who invest in these bonds, will make their investments in cash and on maturity will receive cash only, when these bonds are redeemed.

Features of Sovereign Gold Bond Scheme

  1. The eligibility for these bonds will be for sale for resident Indians, these can be for individuals, Trusts, charitable institutions, Hindu Undivided families etc.
  2. The bonds will be denominated in grams of gold, and multiples thereof.
  3. Minimum investment should be 2 units, which will be at least 2 grams of gold.
  4. Maximum investment will be up to 500 grams of gold, in a fiscal year, the investor will need to even provide a letter of declaration stating the same.
  5. In the event that the investment is done on a joint basis, then the maximum investment of 500 grams will be applied only to 1 of the applicants.
  6. The bonds issuance frequency will occur in tranches, the first tranche of which was accepted in November 2015.
  7. For the tranche issued in November 2015, the issue prices was fixed at Rs. 2,684 per gram.
  8. The payment for these bonds can be made through electronic funds transfer, demand draft, cheque, and even cash payment.
  9. The bonds can be purchased at Scheduled commercial banks and designated Post Offices.
  10. The interest rate you can earn from this bond will be a fixed rate of 2.75% per annum, which will be paid half yearly on the initial investment.
  11. This bonds can be pledged while taking loans and advances from banks and financial institutions.
  12. The treatment of tax for these bonds will be as per the Income Tax Act, 1961 (43 of 1961), any capital gains tax shall also be the same as physical gold, since this is a substitute of the same.
  13. A nomination facility is available for these bonds, the investor will need to fill out a nomination form as well, at the time of application.

The procedures involved to redeem the Sovereign Gold Bonds

  1. The investor will be informed a month prior to the maturity of the bond.
  2. On the date the bond completes its maturity, the amount at the time of maturity will be credited to the bank account provided by the investor.
  3. The investor should intimate the bank, or post office from where the bonds were purchased to let them know of any details changes such as email ids, account numbers etc.

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