3rd tranche of gold bond issue from Tuesday

After the second tranche of the gold bond scheme drew a better response than the first one, the government on Friday announced the scheme's third part, to remain open for a week from the coming Tuesday till March 14.

The price of gold for the first issue in November was Rs 2,682 a gramme and for the second, in January, Rs 2,600 a gramme. It is a simple average of 999-999 purity gold's closing price a week before an issue opens, as declared by the Indian Bullion and Jewellers Association. The coming price would, then, be Rs 2,916 a gramme.

Read more from our special coverage on "GOLD BOND SCHEME"

• Govt to issue third tranche of gold bond scheme soon

The Union Budget of last week has proposed that redemption of these sovereign gold bonds by an individual be exempt from capital gains tax. And, that long-term capital gains to any person on transfer of sovereign gold bonds shall be eligible for indexation benefits.

The bonds will be available for banks' statutory liquidity ratio purposes.

The earlier tranche had attracted 330,000 applicants, for 3,071 kg of gold worth Rs 798 crore, a rise of 200 per cent over the first tranche in November. The latter had seen only 62,169 applications for 915.9 kg of gold worth Rs 246 crore.

The idea behind the scheme is to reduce gold import by offering an option to those who believe in gold as a secure mode of investment. The scheme offers a rate of interest of 2.75 per cent a year on the initial value of investment, payable half-yearly. The bonds are issued by the Reserve Bank of India, on behalf of the government. The maximum amount an individual can subscribe is 500g per person in a financial year. The tenor is for eight years, with an exit option from the fifth year.