sovereign gold bondThe Government of India launched its  Sovereign Gold Bond 2016-17 Series III (SGB) from 27 Feb  to 3 Mar 2017. Issue price for the Sovereign Gold Bond for this tranche has been fixed at  Rs. 2,893 per gram.

 Issue Details

 

Gold BondSovereign Gold Bond 2016-17 Series IV
Issue Open27 Feb 2017
Issue Close03 Mar 2017
Issuance Reserve Bank of India on behalf of Govt of India
Tenor8 Years (Exit option from 5th year)
Price BandRs. 2,893 per gram
Maximum Limit500 grams per person per fiscal year (Apr-Mar)
Interest RateFixed Rate 2.50% per annum payble semi-annually on the initial value of investment
CollateralBond can be used as collateral for loans.
Tradability (Liquidity)Bonds will be tradable on Exchange
Tax TreatmentThe Interest on Gold Bonds shall be taxable. The capital gain tax arising on redemption of SGB to an individual has been exempted.
Indexation The Indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.

Comparison

Comparision of Physical Gold, Gold ETF  & Sovereign Gold Bond 2016-17 Series III :

Physical GoldGold ETFSovereign Gold Bond
ReturnsLower than Actual Return on goldLower than Actual Return on goldHigher than Actual Return on gold
SafetyRisk on handling physical goldHighHigh
Purity of GoldPurity of gold always remains a questionHigh as it Electronic FormHigh as it Electronic Form
Wealth TaxWealth Tax applicable @ 1% on the total valuation of the asset every yearNot ApplicableNot Applicable
Capital GainLong term Capital Gain Tax applicable after 3 yearsLong term Capital Gain Tax applicable after 3 yearsLong term Capital Gain Tax applicable after 3 years ( No Capital Gain Tax if held till maturity)
Collateral Against LoanYesNoYes
Storage CostHighVery lowVery low

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