• The scheme was launched by the government last year to curb the physical gold demand and this is the first gold bond scheme in the financial year 2016-17.

• The first three tranches had attracted an investment of Rs 1,318 crore, equivalent to 4.9 tonnes of gold at the prices prevailing at those times. and it is expected that the fourth tranche of SGB would garner much higher investment.

• “Sovereign Gold Bond (SGB) is an attractive product in many ways. It not only provides the advantage of capital gains but also gives investors an interest of 2.75% annually on the amount invested.

• There’s no income tax on the redemption of gold bonds on expiry. It is eligible for long term capital gains tax at 20% after three years, with indexation benefit. Another advantage is that it can be held in paper or demat form, which further reduces the risks in storing physical gold. The one downside – if you could call it that – is that there’s an investment ceiling of 500 grams in a financial year,”

The  key features of the scheme

• The issuance price for each gram of gold has been fixed at Rs 3,119
• SGB’s minimum subscription has now been reduced to one gram and maximum investment of 500 gm

• The gold bonds will fetch an interest of 2.75 per cent per annum, which is payable every 6 months on initial investment.

• In this tranche minimum subscription has been reduced to 1 gram and maximum at 500 gram per person or institution. Earlier, the minimum denomination was 5 gram.

• On redemption, capital gains are tax exempted.

• The bonds could be used as collateral for loans