Sovereign Gold Bond Scheme 2022-23

Sovereign Gold Bond Scheme 2022-23

• Recently Government of India, in consultation with the Reserve Bank of India, decided to issue Sovereign Gold Bonds in tranches for 2022-23.
• The SGB scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings – used for the purchase of gold – into financial savings.
• The Gold Bonds are issued as Government of India Stock under the Government Securities (GS) Act, 2006.
• These are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
• Bonds are sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges, National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
• The bonds are restricted for sale to resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions.
• Issue Price: Gold bond prices are linked to the price of gold of 999 purity (24 carats) published by India Bullion and Jewellers Association (IBJA), Mumbai.
• A fixed rate of 2.5% per annum is applicable on the scheme, payable semi-annually.
• The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961.

Investment Limit:

• Minimum permissible investment is 1 gram of gold.
• Gold bonds can be purchased in the multiples of one unit, up to certain thresholds for different investors.
• The upper limit for retail (individual) investors and HUFs is 4 kilograms (4,000 units) each per financial year. For trusts and similar entities, an upper limit of 20 kilograms per financial year is applicable.

Term

• The gold bonds come with a maturity period of eight years, with an option to exit the investment after the first five years.
• Bonds can be used as collateral for loans.
• The capital gains tax arising on redemption of SGB to an individual has been exempted.

Source: Pib.Gov

Previous Year Question

Q.1) What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’? (2016)

1. To bring the idle gold lying with Indian households into the economy.
2. To promote FDI in the gold and jewellery sector.
3. To reduce India’s dependence on gold imports.

Select the correct answer using the code given below:

1. 1 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Q.2) With reference to the Indian economy, what are the advantages of “Inflation-Indexed Bonds (IIBs)”? (2022)

1. Government can reduce the coupon rates on its borrowing by way of IIBs.
2. IIBs provide protection to the investors from uncertainty regarding inflation.
3. The interest received as well as capital gains on IIBs are not taxable.

Which of the statements given above are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3