SOVERING BONDS

Sovereign Gold Bonds are Government securities denominated in multiples of gram of gold.
They are substitute for investment in physical gold. To buy the bond, investor has to pay the
issue price in cash to an authorized SEBI Broker. On redemption, cash is deposited into the
investor's registered bank account.
Eligibility to invest in the Sovereign Gold Bonds
Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible
to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities, charitable
institutions, etc.
Features for the new tranche of Sovereign Gold Bond -Series II of 2016-17

The Minimum Subscription is One grams and the maximum Subscription is 500 grams

The Bonds are in denomination of 1, 2, 5, 10, 50, 100 grams of gold or other
denominations.

The interest on the Gold Bonds shall commence from the date of its issue and shall have
a fixed rate of interest i.e. at 2.75 percent per annum on the amount of initial investment.

The Bonds will be available both in De-mat and certificate of holding

Issuance and redemption price of Bond was fixed in Indian Rupees on the basis of the
price of gold of 999 purity of previous week published by the India Bullion and Jewelers
Association Limited.

Subscription date for the fifth Tranche has been fixed from 01-09th Sept, 2016 and the
Bonds shall be issued on the 23th Sept., 2016 and The indexation benefit will be provided
to LTCG arising to any person on transfer of bonds.

Premature redemption of Gold Bond may be permitted after fifth year from the date of
issue of such Bond on the date on which interest is payable and BSE and NSE are
included as receiving offices, apart from the commercial banks, SHCIL, designated post
offices.

Paid at the rate of rupee one per hundred of the total subscription received by the
receiving offices and Capital gain tax arising on redemption of SGB to an individual has
been exempted.

The Gold Bonds issued on November 30, 2015 & February 8 and March 29, 2016 held in
dematerialized form are eligible for trading on the Stock exchanges recognized by the
Government of India w.e.f. 13.06.2016 & 26.08.2016.

The date of commencement of trading in respect of Bonds issued in subsequent tranches

will be notified later.

Reason to Invest in Sovereign Debt

Countries want to continue borrowing, so they generally make a high priority of paying
back debt.

Even if countries are not particularly credit worthy, their sovereign bonds
are usually safer than other domestic alternatives. In a scenario where the government
is defaulting on its debt, it is unlikely that the country's other stocks, bonds or currency
markets are doing well.

Benefits in investing in Sovereign Gold Bonds

The Sovereign Gold Bonds will be available both in demat and paper form and 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 and it
can be used as collateral for loans.

Bonds would be allowed to be traded on exchanges to allow early exits 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.

Capital gain tax arising on redemption of SGB to an individual has been exempted. The
indexation benefit will be provided to LTCG arising to any person on transfer of bonds.
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.

Risks in investing in Sovereign Gold Bonds

There may be a risk of capital loss if the market price of gold declines. However, the
investor does not lose in terms of the units of gold which he has paid for.

A government's ability to pay is a function of its economic position. A country with a

strong economy will likely have the ability to pay back its debt. This ability will usually
be reflected in a strong credit rating by the major ratings agencies. On the other hand, a
country with a weak economy will be in a position to unable to pay back its debt.

A government's willingness to pay back its debt often is a function of its political system
or government leadership. A government may decide not to pay back its debt, even if it
has the ability. This makes political risk analysis an important component of investing in
sovereign bonds. Importantly, ratings agencies take into account willingness to pay as
well as ability to pay when evaluating sovereign credits.

The Know-Your-Customer norms

KYC norms will be the same as that for purchase of physical form of gold. Identification
documents such as Aadhaar card/PAN or TAN /Passport / Voter ID card will be required. KYC
will be done by the issuing banks/SHCIL offices/Post Offices/ NSE and BSE agents. No separate
KYC will be needed for receiving banks own customers.

Tax treatment
The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of
1961). The capital gains tax arising on redemption of SGB to an individual has been exempted.
The indexation benefits will be provided to long term capital gains arising to any person on
transfer of bond

ASSIGNMENT
ON
SOVEREIGN GOLD BONDS

NAME: Kunguma meenakshi S

REG NO: 1511050
SUBJECT: FISAV