Sovereign Gold Bond Scheme 2020-21 (Series III)

The Government of India (GOI), vide Notification No. F.No. 4(4)-B/(W&M)/2020 dated April 13, 2019, Sovereign Gold Bonds 2020-21 (Series III) will be opened for the period June 08-12, 2020 with Settlement date on June 16, 2020.

The Issue price of the Bond during the subscription period shall be Rs 4,677 (Rupees Four thousand Six hundred Seventy seven only) – per gram of gold, as also published by RBI in their Press Release dated June 05, 2020. However, a discount of Rs 50 (Rupees Fifty only) per gram shall be given to those investors who apply online and the payment is made through digital mode. Thus, the issue price of Gold Bond for such investors will be Rs 4,627 (Rupees Four thousand Six hundred twenty seven only) per gram of gold.

** Price of per gram of gold as on 5th June, 2020 is Rs 4,630.

What are Sovereign Gold Bonds (SGB)?

SGBs are government securities issued by RBI on behalf of Government of India. These Bonds are denominated in grams of gold and investors have to pay the issue price in cash. Later on, the bonds will be redeemed in cash on maturity.

Who is eligible to invest in the SGBs?

Resident individuals, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions are eligible to participate in the scheme.

What are the benefits?

- The SGB offers a superior alternative to holding gold in physical form, since the quantity of gold for which the investor pays is protected.

- Investors receives the ongoing market price at the time of redemption/ premature redemption.

- The risks and costs of storage of physical gold are eliminated.

- Investors not only receives the market value of gold at the time of maturity but also the periodical interest.

- SGB is free from issues like making charges and purity in the case of gold in jewellry form.

- The bond can be tradable on Exchanges, if held in demat form. Thus, it can be transferred to any other eligible investor even before pre-maturity.

What is the tenor & periodical interest rate on SGB?

The tenor of the SGB will be eight years (8 years), with exit option after the completion of fifth year to be exercised on interest payment dates.

A fixed rate of 2.5% per annum is applicable on the SGBs, payable semi-annually on the amount of initial investment. However, the last interest will be payable on maturity along with the principal.

What is the minimum and maximum limit for investment?

The Bonds are issued in denominations of one gram of gold and in multiples thereof. Thus, Investors can make a Minimum investment of one gram whereas the Maximum limit of subscription shall be 4 kg for individuals, 4 kg for HUF and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March). In case of joint holding, the limit applies to the first applicant.

[NOTE: The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the secondary market. The ceiling on investment will not include the holdings as collateral by banks and other Financial Institutions]

How Redemption Price will be computed?

The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited (IBJA Ltd.)

What are the tax implications?

Interest Income: The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). However, no TDS, or Tax deducted on source, is levied on Interest Income.

Capital Gain: In case of Individual, no capital gain tax is applicable if held till maturity. In any other cases (including pre-mature redemption), capital gain will arise. However, in case of long term capital gain (LTCG), the indexation benefits will be provided to the investor on transfer of bond.

How will Bonds be sold?

Bonds will be sold through offices or branches of Nationalized Banks / Scheduled Private Banks / Scheduled Foreign Banks / SHCIL (Stock Holding Corporation of India Limited) offices / designated Post Offices / agents.

Forms for application can also be downloaded from the RBI’s website, banks may also provide online application facility.

Government eyes $17 billion investment proposals to boost local manufacturing in three segments

The government is considering proposals for investment of $16-17 billion (around Rs 1.25 lakh crore) to boost domestic production of air conditioners and its components, furniture and leather footwear, while looking at options including duty hikes, to reduce import dependence and push exports.

"To increase manufacturing, "Make in India" and employment, priority sectors have been identified and work has started in three segments- Furniture, Air Conditioner, Leather & Footwear. Just in case of air conditioners, we import over 30% of our demand. We need to reduce this quickly. Similarly, we have a small share in global exports, despite being the second largest leather producer," PM Narendra Modi said at CII's annual session.

Commerce and industry minister Piyush Goyal has held several rounds of talks with a group of CEOs, led by M&M MD Pawan Goenka, with development clusters being the key.

"The overall thrust is to give a push to domestic manufacturing once COVID-19 ends," he told TOI.

Others who have been part of the deliberations suggested development of clusters held the key, while ensuring that it doesn't turn real estate development. "The opportunity lies in large-scale manufacturing, which you can do, given the resources and labour. The key is to set up clusters and identify agencies which can set them up," said Mohit Singla, who leads industry body TPCI.

For Furniture, 3-4 clusters involving investment of $10-11 billion (over Rs 75,000 crore) have been discussed, while investment of around $6 billion (around Rs 45,000 crore) has been proposed to reduce the dependence on imports, which is as high as 90% in case of compressors and 80-100% for other components.

Further investment of over $1 billion has been proposed to scale up the leather footwear business to attract global investors and improve the quality and branding exercise so that Indian exports (which have a meagre 3.5% share) can compete with rivals from China, Vietnam and Indonesia, sources told TOI.

For ACs, the government has been advised to increase customs duty on components to discourage imports from China. Steps are also being contemplated to reduce imports from Thailand. Similarly, some duty hikes for wood that goes into making furniture are also being contemplated, with the long-term solution lying in a forestry policy that supports ecology and the economy, something that Vietnam has done successfully.

**(This article was originally published in The Times of India)

CBDT notifies New Form 26-AS

CBDT notifies New Form-26AS [Annual Information Statement] pursuant to Finance Act, 2020 and amendment, inserts new Rule 114-I to be effective from June 1st and omits Rule 31AB.

New Form-26AS relating to FY 2020-21 shall contain the following information:

1. Information relating to tax deducted or collected at source (TDS or TCS)

2. Information relating to specified financial transaction (SFT)

3. Information relating to payment of taxes

4. Information relating to demand and refund

5. Information relating to pending proceedings

6. Information relating to completed proceedings

7. Any other information in relation to sub-rule (2) of rule 114-I

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