Distributors registered on NSE II MF platform will be able to buy the fourth tranche of sovereign gold bonds (SGB) which opened for subscription today and closes on July 22. The bonds will be issued on August 5.
Distributors registered on NSE II platform can even initiate transactions on behalf of investors who have not registered on the platform. Distributors will get upfront commission of 95 basis point if they collect up to Rs. 20 crore and 99 basis point on collections exceeding Rs. 20 crore.
To initiate transactions on behalf of their clients, distributors have to create a SGB ID. There is no cut off time and orders can be placed 24*7 till Friday evening.
The government has fixed a price of 3,119 per gram as the issue price. To attract retail investors, the government has slashed the minimum subscription from two grams to one gram in the fourth tranche. The maximum subscription remains the same at 500 grams (per fiscal year).
To make the scheme lucrative for individual investors, the Budget 2016 has removed capital gains tax on redemption of SGB. SGB will be treated as physical gold for taxation. That means, if an investor sells these bonds through an exchange within three years, the gains, if any, will be taxed at marginal rate of taxation. Similarly, long term capital gains arising out of sale of bonds after three years will be taxed at 10% or 20% with indexation.
NMF II is a platform for facilitating transactions in mutual fund by distributors. Started in 2014, NSE MF II platform has 1,800 registered users on its platform. NSE’s rival BSE is also in the process of facilitating the fifth tranche of SGB on its StAR MF platform.
