No capital gains tax on redemption of gold bonds

 New Delhi: In a bid to popularise the ambitious Sovereign Gold Bond scheme, Finance Minister Arun Jaitley on Monday proposed exempting such bonds from capital gains tax on redemption.

"It is proposed to provide that redemption by an individual of Sovereign Gold Bond issued by Reserve Bank of India under Sovereign Gold Bond Scheme, 2015 shall not be charged capital gains tax," he said in his Budget proposals.

Additionally, long terms capital gains arising to any person on transfer of Sovereign Gold Bond would be eligible for indexation benefits.

Under the gold bond scheme, investors are given the option to buy bonds in denominations of 5, 10, 50 or 100 grams for a term of 5-7 years with a rate of interest to be calculated on the value of the metal at the time of investment.

So far, the RBI has issued gold bonds twice, with the second tranche launched in January.

Jaitley added that interest earned on Deposit Certificates issued under Gold Monetisation Scheme, 2015 and capital gains arising from them would be exempt from tax.

Under the gold monetisation scheme launched on November 5, banks are authorised to collect gold for up to 15 years to auction them off or lend to jewellers from time to time.

India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest component of the imports bill after crude oil.

The schemes are aimed at reducing the demand for gold in physical form.