Sovereign Gold Bond Scheme Series - II

Sovereign Gold Bond Scheme Series-II [Review]: Should you invest?

Government of India in association with Reserve bank of India had successfully launched Sovereign Gold Bond Scheme Series-I during June’ 19.

Now Sovereign Gold Bond Scheme Series-II is on its way and it is open for Subscription from 8th July to 12th July 2019. After subscription, bonds will be issued on 16th July 2019.

Below are 10-necessary details to consider before investing in the Sovereign Gold Bond Scheme(2019-20)

1. Product name and Issuance:

Sovereign Gold Bond 2019-20, issued by Reserve Bank of India on behalf of Government of India.

2. Important Dates of Subscription:

8th July to 10th July 2019. After Subscription, Sovereign Gold bonds will be issued on 16th July 2019.

Gold Bond

3. Eligibility:

Sovereign Gold bonds are restricted for investment by Indian Residents, HUFs, Trusts, Universities, and Charitable Institutions. They are not open for investments made by NRIs.

4. Tenure of the Sovereign Gold Bond:

8 years, however you an exit option after 5 years onwards.

5. Interest Rateof this Sovereign Gold Bond:

Semi-annual interest of 2.5% per annum up to 8 years of maturity.

6. Minimum and Maximum investment limit:

Minimum permissible investment will be 1 gm of Gold and maximum limit is 4 kg for an individual and HUFs.

20 kg is the Maximum limit for trusts, a charitable institution and similar organizational entities notified by Government of India.

7. Where to buy?

Sovereign Gold Bonds can be purchased from

  • Commercial banks,
  • Stock Holding Corporation of India Limited (SHCIL),
  • Designated post offices; and
  • Recognized Stock Exchanges such as National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Bonds can be purchased either directly or through agents.

8. Required KYC:

Know-Your-Customer (KYC) norms that are applicable for the purchase of Gold Coins or Gold Bars, will be applied for this Sovereign Gold Bond scheme as well.

KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
Each application must be filled with the information of your ‘PAN Number’.

9. Payment option:

Payment limit is ₹ 20,000 if you want to pay through cash. Payment can also be made through Demand Draft, Cheque and Internet Banking.

10. Issue Price:

Price of this Sovereign Gold Bond is fixed in Indian Rupees (INR) on the basis of simple average of closing price of 999 purity gold that is published by the certified agency for gold standards called India Bullion and Jewelers Association Limited.

The issue price of the Gold Bonds will be ₹50 per gram less for those who subscribe online and pay through digital mode.

Important points to Consider for Sovereign Gold Scheme

Joint Holding:

As mentioned, the investment limit of 4 kg will be applicable for Joint holdings by Trusts or similar Institutions. The first applicant in the application will be responsible for the entire investment limit.

Denomination of Bonds:

Denomination of Bonds will be in grams of Gold with a basic unit of a gram.

Issuance Form:

All investors will be issued a Holding Certificate from Government of India Stock. The Sovereign Gold Bonds can be converted into Demat form.

Redemption Price:

The redemption price of the Sovereign Gold bond will be in Indian Rupees based on previous 3 working days simple average of the closing price of gold of 999 purity published by IBJA.

Tax Treatment:

According to the provision of Income Tax Act, 1961 (43 of 1961), the interest on Gold Bonds are taxable.

If you choose to redeem Sovereign Gold Bond on maturity, then the capital gain taxes arising on redemption will be exempted to an individual.

The benefits of Indexation will be provided to long term capital gains arising to any person on transfer of Sovereign Gold bond.


After the issuance of Sovereign Gold Bond on a date notified by RBI, within a fortnight, Sovereign Gold bonds will be tradable on stock exchanges.

Contact information for queries and related consumer services:

All the agencies where you can buy Sovereign Gold Bond, such as Banks, SHCIL offices, Designated Post Offices will provide essential customer services such as:

  • Change of address,
  • Early redemption,
  • Nomination,
  • Grievance Redressal, etc.

Along with above support, a customer friendly e-mail has been created by the Reserve Bank of India to receive queries from the public on Sovereign Gold Bonds. If you plan to invest in Sovereign Gold Bond, you can mail your queries to the email id:

Some Benefits and Limitations of Sovereign Gold Bond

Before investing in Sovereign Gold Bond, it is useful to know their significant benefits and associated limitations. It will give you an unbiased idea to make an informed investment decision in this Sovereign Gold bond scheme.

Benefits of Sovereign Gold Bond :

    1. Since, the issuing agency is RBI, Government of India. It is considered a safe investment. Also, the online support provided by them is outstanding.

    2. If you choose to invest in physical Gold bars or gold coins, there will be significant maintenance and safekeeping cost. But Sovereign Gold Bond is free of all such costs. Other forms of gold investments will give you only the benefit of appreciation from the gold price. These Sovereign Gold bonds will provide you an additional 2.5 interest to you without TDS along with the benefit of appreciation in the gold price.

    3. After the introduction of GST, the VAT charges on Gold Bars or Gold Coins are significantly increased. Therefore, Sovereign Gold Bond Scheme provides a better alternative option.

    4. Payments can be made in online mode, they are hassle-free and transparent. Online payment delivers the fastest and most transparent mode of payment, where, within the seconds of the transaction made, you will receive the confirmation of your payment.

    5. There is no TDS for the 2.5% interest obtained from this Sovereign Gold bond.

    6. There is semi-annual interest payment on your investment of Sovereign Gold Bond. Therefore, there are two types of income possibilities:

      (i) Interest income from investment,
      (ii) Price appreciation of Gold.

    It means along with price appreciation of gold, you will receive the interest income from your investment of Sovereign Gold Bond.


    1. 8 year investment is a long term investment. Investing in other inflation beating investment vehicles such as equity may provide you the better returns in your investment.

    2. The Sovereign Gold bond will be illiquid for the first 5 years. That means, your money will be fixed for 5 years. And, redemption is possible only after the 5th year.

    In case you want to liquidate in a secondary market, then it is hard to find the right price andalso the capital gain tax may ruin your investment

    3. If there is a fall in the gold price on maturity, then you will end up getting that reduced price.

Final Verdict

If you are comfortable taking risk, then instead of locking your funds in Sovereign Gold Bond which will not help you beat inflation, you can invest in Equity funds which can beat inflation.

You can invest in this Sovereign Gold Bond scheme if you satisfy the below conditions:

  • You already have equity stocks or mutual funds in your portfolio.
  • Looking for a safer investment in Gold. Then instead of investing in Gold Coins or Gold bars, it is advisable to invest in Sovereign Gold Bond.

For more details regarding this bond you can book your FREE Complimentary Consultation call with us, by clicking the link below:


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