Gold bonds issued on Nov 17 eligible for trading from today

Mumbai: RBI has said that the Sovereign Gold Bonds (SGBs) issued on November 17 will become eligible for trading on stock exchanges from Friday onwards.

So far, the government has come out with six tranches of the SGBs, an alternative mode of investment to physical gold which was launched in November last year. It provides investors a choice to diversify portfolio without the need to buy the metal in physical form.

The maximum amount subscribed by an entity under the SGBs cannot be more than 500 grams per person per fiscal year. A self-declaration to this effect will be obtained. In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

Price of bond are fixed in rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period.

The bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

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.

Bonds will be tradeable on stock exchanges from a date to be notified by the RBI.