Gold Bond scheme gets good response: Government

New Delhi, Nov 27 (IANS) The first tranche of the Sovereign Gold Bond scheme has received an excellent response, garnering over Rs.240 crore, an official said on Friday.

“Gold Bond Scheme: 63000 applications for 917 kgs. gold amounting to Rs.246 cr in first tranche. Excellent response for an innovative product,” tweeted Economic Affairs Secretary Shaktikanta Das.

The government, on Wednesday, had extended the issue date of the scheme’s first tranche by four days to November 30 to enable proper processing.

A finance ministry statement said a large number of applications had been received by banks and post offices, which were designated sale points, and the date was extended from November 26 to November 30 “to enable smooth uploading of applications into RBI’s E-kuber system, particularly by the post offices”.

Subscription for the bonds, announced by Finance Minister Arun Jaitley in the 2015-16 budget as a financial asset serving as an alternative to the precious metal, was open from November 5 to 20.

Denominated in multiples of gram(s) of gold with minimum investment of two grams and maximum of 500 grams per person per fiscal, the bonds were to be sold only to resident Indian entities including individuals, Hindu undivided families, trusts, universities, and charitable institutions. For joint holders, the limit will be applied on the first holder.

The issue and redemption price are in Indian rupees fixed on the basis of the previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd.

Having an eight year tenure with exit option beginning the fifth year onwards, the bonds will also be tradable in the bourses. The rate of interest will be 2.75 percent per annum payable semi-annually on the initial value of investment.

They can be used as collateral for loans, with the loan-to-value (LTV) ratio to be set equal to ordinary gold loan mandated by the RBI from time to time.

Interest on gold bonds will be taxable as per the provision of Income Tax Act, 1961 and capital gains tax shall also remain same as in the case of physical gold.

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