Capital Gains Exemption In SGBs Not For Secondary Buyers, Premature Sales
Capital gains exemption will be applicable only to those who subscribe them at the time of original issue and hold continuously until redemption on maturity, which is eight years: Reports
CHENNAI: The Budget proposes to take away the capital gains exemption on Sovereign Gold Bonds from secondary market buyers, premature sales, and non-individuals to curb speculation and improve government revenues.
Capital gains exemption will be applicable only to those who subscribe them at the time of original issue and hold continuously until redemption on maturity, which is eight years. This will be available for individual subscribers alone.
“It is also proposed to provide that this exemption applies uniformly to all issuances of Sovereign Gold Bonds by the Reserve Bank of India,” the Budget said.
According to Ajay Kedia, MD, Kedia Commodities, the proposal will curb speculation in SGBs and treat the bonds as an investment and not instruments of trading. The capital gains will bring down the secondary premium by 10-15 per cent.
It will also boost primary demand during the RBI issue and provide the government additional Rs 5000 crore as extra LTCG from secondary sales.
“The SGBs were intended to protect the interests of the retail investors. But of late, traders and speculators have been showing interest in bonds and the new proposal will hit the trading activity,” he said. It will deter arbitrage trading in the bonds, which also offer additional interest apart from the advantage of price appreciation of the metal.
