Sovereign Gold Bond Scheme 2020-21 opens for subscription

The apex bank of India i.e. Reserve Bank of India (RBI) on the behalf of Government of India, is issuing the fifth series of Sovereign Gold Bond Scheme 2020-21.

The issue opens for public subscription on August 3 and will close on August 7, 2020. Investors, who apply online, will get a discount of Rs 50 and would be paying Rs 5,284 per gram whereas investors, using the physical mode, will have to pay Rs 5,334 per gram.

Gold has generated almost 50.5 per cent in the last one year and from the beginning of this fiscal, it has generated a return of 15 per cent. Meanwhile, the first tranche of Sovereign Gold Bond was issued in the month of April at Rs 4,589 per gram.

Features of Sovereign Gold Funds 2020-21 Series 5:

- Issue period is from August 3 to August 7

- Anyone can invest in this fund, irrespective of being individual, Hindu undivided family (HUFs), trust, universities, and charitable institutions.

- Issue price: Rs 5,284 per gram (online mode) and Rs 5,334 per gram (offline mode)

- This will have a lock-in period of eight years, with an exit option after the fifth year on interest payment dates.

- Investment limit per annum: Minimum one per gram and maximum of four kilograms for individual and HUF. Trust or similar entities can invest up to 20 kilograms.

- Subscribers will get a 2.5 per cent interest over and above the gold’s market price. This is being paid semi-annually.

- Zero capital gains tax on maturity for individual investors.

- Return is better than the physical gold and ETF as it does not involve any storage or carrying cost.

- These bonds are listed in exchanges and hence, if you need liquidity, you can sell on exchanges.

- There is no wealth tax applicable to such investment.

What should you do?

As an investor, if you want to invest in yellow metal for the long-term, Sovereign Gold Bond should be your first choice as it offers various advantages in comparison to other ways of holding gold. There is no wealth tax or zero capital gains tax on maturity. Besides, investors earn an annual of 2.5 per cent interest.

In terms of the amount of investment, investors can allocate 5 to 10 per cent of their portfolio to gold. It is likely to perform better due to the weakening dollar, geopolitical tensions, and slowing global growth.