Review of Sovereign Gold Bond Scheme Dec-2019 Series-VII

Whether it is the occasion of Akshaya Trithiya, Dhanteras, Diwali, or the big fat Indian wedding, Indians love buying gold. Taking into account our obsession with sovereigns, the government has introduced a lucrative opportunity to invest in gold bullion via the sovereign gold bond scheme series-VII.

Salient Features of Sovereign Gold Bond Scheme Series-VII Dec-2019

Open for subscription from 2nd Dec 2019.
Last date to subscribe is 6th Dec 2019.
Bonds will be issued on 10th Dec 2019.
Bonds will be in either physical or dematerialized form.
You can invest in denominations of gold in grams.
Minimum investment starts from 1 gram.
Rs.50 discount per gram of gold.
Upper limit of 4 kilograms for 1 fiscal year.
Get 2.5% interest per annum credited every 6 months.
On maturity, take the amount worth the current gold value.
An 8 year time period of investment.
Bond can act as collateral to secure loans from your bank.
Reliable and safe, as issued by the Government of India.

Market Value of Sovereign Gold Bond Scheme Series-VII Dec-2019

The bonds can be traded in the National Stock Exchange and the Bombay Stock Exchange, though the market value would vary, depending on current gold rates and the interest accumulated.

Tax Implications for Sovereign Gold Bond Scheme Series-VII Dec-2019

While the interest received from this scheme is taxable, the capital appreciation you receive, which is separate from interest, is exempt from being taxed.
In case you transfer or gift this bond to someone else, he or she will be taxed on the long-term capital gain.

Exit And Withdrawal From Sovereign Gold Bond Scheme Series-VII Dec-2019

If you wish to exit from this scheme, you can do so at the completion of a minimum of 5 years.

Although the bond has a lock-in period of eight years, withdrawal is possible 1, 2, or 3 years before maturity, and during the half-yearly phase of interest credit.

Maturity Amount for Sovereign Gold Bond Scheme Series-VII Dec-2019

At the end of the maturity period one can get the final amount keeping in view the current gold prices.

For example, if you bought 30 grams of gold at the rate of Rs.6000/gram and after the maturity period the rates have soared to Rs.8000/gram you would get Rs. 2,40,000.

Anyway, the final amount will be concurrent with the current gold rate at the time of maturity, which will make it possible for you to buy the required sovereigns of jewellery.

Buying Options for Sovereign Gold Bond Scheme Series-VII Dec-2019

You can avail this scheme in major banks like ICICI, HDFC, and SBI, as well as Post Offices and the Stock Holding Corporation of India.

KYC is mandatory to apply for this scheme.

Prospective Customers for Sovereign Gold Bond Scheme Series-VII Dec-2019

All resident citizens of India.
Hindu Undivided Families (HUFs).
Partnership firms.
Corporate companies registered in India.

Non Resident Indians (NRIs) cannot apply for the scheme.

A Few Points to Consider Regarding Sovereign Gold Bond Scheme Series-VII Dec-2019

Gold bonds as long term investments:

While this scheme is intended to encourage the purchase of gold as tangible asset in future, there has been little appreciation in gold prices in the last few years.
Gold has not appreciated even at bank FD rates.
If you intend to invest in this scheme purely for appreciation value, then you might want to hedge your bets.
Gold has been bearish in the market for quite some time. You can get better returns by investing in mutual funds and bank FDs.

Gold bonds for future consumption requirements:

You might also want to invest in this scheme, like the majority of Indians do, for marriage and ceremonial occasions in the future.
For example, if you want to accumulate gold for your daughter’s wedding, you can invest in these bonds. These bonds are the best form of investing in gold compared to the other options like e-gold, wallet gold, gold ETF and physical gold.

Conclusion

Gold rates will continue to be unpredictable. But this scheme is the best option to ensure that in future, you can save for the sovereigns of jewellery that you require for your daughter’s marriage, or as gifts for your spouse. Furthermore, you don’t have to take the trouble of storing real gold in bank lockers and home safes and keep worrying about their safety.