Skip to main content

Sovereign Gold Bonds Scheme

The government today approved the Sovereign Gold Bonds Scheme, which was announced in the Budget 2015-16. As investors will get returns that are linked to gold price, the scheme is expected to reduce the demand for physical gold. The bonds will offer same benefits as physical gold.

They can be used as collateral for loans and can be sold or traded on stock exchanges as they are available in demat form. At the same time investors need not worry about holding physical gold.

The gold bonds will be issued by the Reserve Bank of India. Since these are Government of India bonds, they are sovereign.

The bonds will be denominated in grams of gold. Investors can pay money and buy these bonds from intermediaries, who will be announced later.

* The bonds can be purchased only by resident individuals or entities. There will be a cap on bonds that can be purchased. It could be 500 gms per person per year.

* The government will decide the rate of interest. The rate will be calculated on the value of the gold at the time of investment. It could be floating or fixed rate. The principal amount of investment, which is denominated in grams of gold, will be redeemed at the price of gold at that time. If the price of gold has fallen from the time that the investment was made, the depositor will be given an option to roll over the bond for three or more years.

* The bonds will be available both in demat and paper form. They will be issued in denominations of 5,10,50,100 gms of gold or other denominations

* The bonds will be issued and redeemed by banks, non-banking finance companies, National Saving Certificate (NSC) agents for a fee. This fee will be decided later

* The price of gold may be taken from the reference rate, as decided and the rupee equivalent amount may be converted at the RBI reference rate on issue and redemption. This rate will be used for issuance, redemption and Loan to Value purpose and disbursement of loans.

* The tenor of the bond could be for a minimum of five to seven years.

* These bonds can be used as collateral for loans. The LTV will be equal to that of ordinary gold loans. As per RBI regulations, the maximum LTV allowed for gold loans is 75 per cent.

* It will be possible to sell and trade the bonds on exchanges, in case investors want to redeem them before maturity. The KYC for the bonds is same as that for gold. Currently, if you purchase gold worth more than Rs 50,000 you have to show proof of KYC, such as PAN card, etc.

* Capital gains tax will be the same as for physical gold for individual investors. This means that short-term capital gains tax will apply if you sell within three years. The profits will be added to your income and taxed at income slab. Long term capital gains tax is 20 per cent with indexation.

Comments

Popular posts from this blog

INSPECTION MANUAL OF STOCK, BOOK DEBTS & SECURITIES

CONTENTS SR. NO. CHAPTER PAGE NO. INTRODUCTION STOCK & RECEIVABLES AUDIT VERIFICATION OF STOCK & DEBTORS PROCEDURE OF STOCK AUDIT VERIFICATION OF SECURITIES ANALYTICAL REVIEW INTERNAL CONTROL QUESTIONNAIRE STOCK b) BOOK DEBTS LIST OF DOCUMENTS TAKEN AS WORKING PAPERS SPECIMEN INSPECTION REPORT SPECIMEN MANAGEMENT REPRESENTATION LETTER CHAPTER 1 INTRODUCTION: Banking is an important sector of the economy of any country and for the development of the economy a healthy banking system is a must. After the liberalization of the economy, the banking system has undergone a total change in India. There is hard competition in the banking industry to survive in the current circumstances. With the purpose to have better financial discipline & to ensure uniformity in accounting norms RBI introduced the concept of assetclassification & income recognition as per the recommendations of Narasimhan Committee. It was also suggested to classify the advances given by banks into Performing & Non Perfor…

Excel Add-in to convert amount in figures to words by Premal

Gentlemen:
AmtInWords.xla is attached to this mail. It is an MS Excel Add-in written by me to convert amount available in figures to words.
Installation
Copy the attached file to the folder where excel stores the add-ins. (To know where excel stores the add-ins, open any workbook, click on Tools - Add-ins - Browse)
Then open an excel workbook. Click on Tools - Add-ins - Browse - Give the path to this Addin - Ok
Usage
You can use the functions AmtInWords and AmtInWordsUS in any worksheet. The syntax is:
=AmtInWords(decimal number/cell reference, [currency code])
=AmtInWordsUS(decimal number/cell reference, [currency code])
Examples follow:
=AmtInWords(10000000)
=AmtInWords(123456.77)
=AmtInWords(C4)
=AmtInWordsUS(B3) ' Shall give the amount in millions (US format)
=AmtInWordsUS(B3,"USD") ' Shall give the amount in millions (US format) and in US currency (Dollars)
=AmtInWords(C4,"GBP") ' Shall give the amount in lakhs and in UK currency (Pounds)
Notes
The system shall N…

A Complete Guide to sections 54 & 54F Exemptions - T.V. GANESAN CS

A Complete Guide to sections 54 & 54F Exemptions T.V. GANESAN CS If an individual transfers any long-term capital asset and plans to reinvest the sale proceeds in a new residential house property then he would be eligible to claim exemption under sections 54 and 54F of the Income-tax Act, 1961 subject to fulfilment of certain conditions. In the last couple of years there has been a phenomenal increase in the sale of properties resulting in capital gain including but not limited to the land owners giving the land to the developers and entering into Joint Development Agreement, receiving more than one flat from the builder and yet avoiding capital gains tax. In this article the author has enumerated various decisions and judgments of the Tribunals and the High Courts which have liberally interpreted the provisions of the Income-tax Act and extended the capital gains exemptions to the assessees. Introduction 1. Out of the various investment options available, investment in real estate …