Sovereign Gold Bonds 

• The SGB offers a superior alternative to holding gold in physical form.

• The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.

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

• The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

• The Bonds bear interest at the rate of 2.75 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

• The Sovereign Gold Bonds will be available both in demat and paper form.

• The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.

• They will carry sovereign guarantee both on the capital invested and the interest.

• Bonds can be used as collateral for loans.

• Bonds would be allowed to be traded on exchanges to allow earlyexits for investors who may so desire.

• Further, bonds would be allowed to be traded on exchanges to allow early exits for investors who may so desire.

• In Sovereign Gold Bonds, capital gains tax treatment will be the same as for physical gold for an 'individual' investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption.

For Upcoming SGB Schemes Click Here

Non Competitive Bidding (NCB G-sec) 

As part of the overall strategy of diversifying the investor base for government securities, the Government of India and RBI have been taking various measures to encourage participation of retail investors in G-Sec market including introduction of non-competitive bidding in primary auctions. In continuation of this endeavour, the Union Budget 2016-17 had announced, inter-alia, that RBI will facilitate retail participation in the primary markets through stock exchanges. In line with this announcement and in consultation with SEBI, Specified Stock exchanges are now permitted to act as aggregators/ facilitators for non-competitive bidding for government auctions in G-secs and T-bills. 

Following Government Securities (G-sec) shall for available for non-competitive bidding (NCB) in the primary Auction -

• Government Bonds or dated securities: Dated G-Secs are securities which carry a fixed or floating coupon (interest rate) which is paid on the face value, on half-yearly basis. It can be either be new issue or Re-issue.

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• Treasury bills: Treasury bills are zero coupon securities and pay no interest. They are issued at a discount and redeemed at the face value at maturity. T-Bills are issued in three tenors, namely, 91 days, 182 days and 364 days.

These securities are even tradable in secondary market on the Exchange. 

For Upcoming Auctions  Click HERE

BONDS

• A Bond is a debt instrument issued for the purpose of raising capital by borrowing.

• Bonds can be issued by companies, financial institutions or the government. Bonds issued by the government are considered the safest bonds.

• Bonds can be divided into different categories based on tax status, credit rating, issuer type and maturity.

• Bonds are suitable for regular income purposes.

• Specific tax saving or tax free bonds are available that offer certain tax benefits to the investor.

Capital Gain Bonds

• In accordance with section 54 EC of the Income Tax Act, 1961, all categories of tax payers would be eligible to save tax in respect of long term capital gains by making investments in certain Bonds prescribed.

• These bonds are classified as 'long-term specified asset' and are issued by REC, NHAI, PFC and IRFC.

• These bonds are specifically for investors who have made some long term capital gains, and would like to save capital gain taxes on this amount.

• Only long term capital gains are eligible for these bonds though, and short term gains are not covered under section 54EC.

• The interest from these bonds is fully taxable

Condition for Exemption from Tax U/S 54 EC:

• The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds

• Such investment is held for 5 Years

• To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date of acquisition else, the benefit would be withdrawn.

• If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

• A Bond is a debt instrument issued for the purpose of raising capital by borrowing.

• Bonds can be issued by companies, financial institutions or the government. Bonds issued by the government are considered the safest bonds.

• Bonds can be divided into different categories based on tax status, credit rating, issuer type and maturity.

• Bonds are suitable for regular income purposes.

• Specific tax saving or tax free bonds are available that offer certain tax benefits to the investor.

REC Capital Gains Bonds

• Rural Electrification Corporation Limited (REC) is a Navratna Company functioning under the purview of the Ministry of Power.

• It’s a public Infrastructure Finance Company in India’s power sector.

• The company finances and promotes rural electrification projects across India.

• The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers.

• The company is listed on both National Stock Exchange and Bombay Stock Exchange.

• Business operations in India are supported by a network of 13 Project Offices and 5 Zonal Offices, headquartered in New Delhi.

PFC Capital Gain Bonds Series I

• The Power Finance Corporation Ltd. Incorporated on July 16th, 1986, Company was conferred the title of a 'Navratna CPSE' in June, 2007 and it’s a leading Non-Banking Financial Corporation in the Country.

• It is the financial back bone of Indian Power Sector.

• PFC's registered office is located at New Delhi and regional offices are located at Mumbai and Chennai.

• It’s a consistently profit-making and dividend-paying company & also Strong asset quality reflected in low NPAs in the company.The company is listed on both National Stock Exchange and Bombay Stock Exchange

IRFC Capital Gain Bonds Series I

• Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets.

• IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control of the Ministry of Railways, Govt.

• In more than 30 years of existence, IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.

• Company raises money through financial bonds and from banks and financial institutions.