Header Ads

Fourth tranche of Sovereign Gold Bonds



Fourth tranche of Sovereign Gold Bonds: Applications for the bond will be accepted from July 18, 2016 to July 22, 2016.


The Government of India, in consultation with the Reserve Bank of India, has decided to issue fourth tranche of Sovereign Gold Bonds. Applications for the bond will be accepted from July 18, 2016 to July 22, 2016. The Bonds will be issued on August 5, 2016. The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange.


It may be recalled that Honourable Finance Minister had announced in Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold.

Accordingly, three tranches of issuances have been undertaken during 2015-16. The features of the Bond are given below:

Sl. No.
Item
Details
1
Product name
Sovereign Gold Bond 2016-17 – Series I
2
Issuance
To be issued by Reserve Bank India on behalf of the Government of India.
3
Eligibility
The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable Institutions.
4
Denomination
The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5
Tenor
The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
6
Minimum size
Minimum permissible investment will be 1 grams of gold.
7
Maximum limit
The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
8
Joint holder
In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
9
Issue price
Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Limited for the week (Monday to Friday) preceding the subscription period.
10
Payment option
Payment for the Bonds will be through cash payment (upto a maximum of Rs. 20,000) or demand draft or cheque or electronic banking.
11
Issuance form
Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate. The Bonds are eligible for conversion into demat form.
12
Redemption price
The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
13
Sales channel
Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices as may be notified and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14
Interest rate
The investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment.
15
Collateral
Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
16
KYC Documentation
Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
17
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
18
Tradability
Bonds will be tradable on stock exchanges/NDS-OM from a date to be notified by RBI.
19
SLR eligibility
The Bonds will be eligible for Statutory Liquidity Ratio purposes.
20
Commission
Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received  by  the  receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.

******

Recommendations of SIT on Black Money as Contained in the Fifth SIT Report 

 
The Fifth SIT report has been submitted before the Hon’ble Supreme Court by the SIT. An extract of the report has been uploaded on Department of Revenue website www.dor.gov.in.
 
The SIT has made the following recommendations in the Fifth Report:
 
Cash transactions : The SIT has felt that large amount of unaccounted wealth is stored and used in form of cash. Having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions the SIT felt that there is a need to put an upper limit to cash transactions. Thus, the SIT has recommended that there should be a total ban on cash transactions above Rs. 3, 00,000 and an Act be framed to declare such transactions as illegal and punishable under law.
 
Cash holding : The SIT has further felt that, given the fact of unaccounted wealth being held in cash which are further confirmed by huge cash recoveries in numerous enforcement actions by law enforcement agencies from time to time, the above limit of cash transaction can only succeed if there is a limitation on cash holding, as suggested in its previous reports. SIT has suggested an upper limit of Rs. 15 lakhs on cash holding. Further, stating that in case any person or industry requires holding more cash, it may obtain necessary permission from the Commissioner of Income tax of the area.
 
Suggestions are invited on the above recommendations of SIT at sit_suggestions@nic.in
 
******

Government of India and ADB Sign US $ 100 Million Loan for 'Climate Adaptation in Vennar Subbasin of Cauvery Delta project' in Tamil Nadu 

The Government of India and the Asian Development Bank (ADB) today signed a $100 million loan agreement to strengthen key irrigation and drainage system and improve water management in the Vennar sub-basin of the Cauvery delta in Tamil Nadu. The financing will be used to strengthen embankments of six major irrigation water channels in the Vennar system and rehabilitate 13 irrigation pumping schemes. 
 
“The Cauvery river basin is a critical source of water for agriculture, both within Tamil Nadu and neighbouring states. The vast majority of the delta’s population is engaged in farming and fishing. The project aims to improve existing infrastructure and will provide flood protection and renewed access to irrigation,” said Mr. Raj Kumar, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, who signed the agreement on behalf of the Government of India.
 
“The loan will support Tamil Nadu’s water resources professionals to manage resources better, and with greater involvement of the stakeholders they service,” said Mr. L. B. Sondjaja, Deputy Country Director of ADB’s India Resident Mission, who signed the loan agreement for ADB. “Communities will be involved in planning and delivery of water services. Flood forecasting and warning systems will be installed and a flood risks map drawn up to help communities respond more effectively to extreme events.”


A separate project agreement was signed by Mr. V. Shanmugam, Chief Engineer, Water Resources Department, on behalf of the State of Tamil Nadu.
 
            The loan from ADB’s ordinary capital resources has a 25-year term. The Water Resources Department of the State of Tamil Nadu is responsible for implementing the project, which is expected to be completed by December 2020.

*******

Income Declaration Scheme 2016 – Government Revises Time Schedule for Making Payments under the Scheme 

During the course of meetings and seminars held in different parts of the country, various stakeholders have expressed concern that the time period available under the Scheme up to 30th November, 2016 for making payment of tax, surcharge and penalty is very short, especially where funds in liquid form are not readily available with the declarants. It has also been mentioned that for making payment by 30.11.2016, the declarants may have to opt for distress sale of the assets. 

Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme as under: 

(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016; (ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and (iii) the balance amount to be paid on or before 30.9.2017. 

A Notification to this effect shall be issued shortly. 

******

Income Declaration Scheme 2016 – Government Issues Clarifications in the form of Fourth Set of Frequently Asked Questions (FAQs) 

 
The Income Declaration Scheme, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. The Board has issued three sets of clarifications in the form of FAQs. The fourth set of Frequently Asked Questions (FAQs) providing clarification on various issues are in the process of being issued and will be available on the official website of the Income Tax Department i.e., www.incometaxindia.gov.in later today.
 
Queries have been received from various  stakeholders whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to around 31%. The fourth set of FAQs seek to set this issue at rest as follows:
 
“Question No. 6:       With reference to Question No.5 issued vide Circular No.25 of 2016, wherein it has been stated that the department will not make any enquiry in respect of sources of income, payment of tax, surcharge and penalty, it may be clarified that whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to round 31 per cent?
 
Answer:                      It is clarified that the intent of the clarification issued vide Question No.5 of Circular No.25 of 2016 was limited to conduct of enquiry by the Department. It in no way intends to modify or alter the rate of tax, surcharge and penalty payable under the Scheme which have been clearly specified in the Scheme itself.  Sections 184 & 185 of the Finance Act, 2016 unambigously provide for payment of tax, surcharge and penalty at the rate of 45 per cent of undisclosed income. This is illustrated by the following example—
 
                                    In a case a person declares Rs.100 lakh as undisclosed income, being the fair market value of undisclosed immovable property as on 1st June, 2016 and pays tax, surcharge and penalty or Rs.45 lakh (30 lakh + 7.5 lakh + 7.5 lakh) on the same out of his other undisclosed income. In this case the declarant will not get any immunity under the Scheme in respect of undisclosed income of 45 lakh utilized for payment of tax, surcharge and penalty but not included in the declaration filed under the Scheme. To get immunity under the Scheme in respect of the entire undisclosed income of Rs.145 lakh (Rs.100 lakh being undisclosed income represented by immovable property and Rs.45 lakh being the payment made from undisclosed income) and pay tax, surcharge and penalty under the Scheme amounting to Rs.65.25 lakh i.e., 45 per cent of Rs. 145 lakh.”
 
Other queries related to revision of declaration, chargeability of capital gain and TDS on transfer of property from benamidar to beneficial owner etc. have also been dealt with in the circular.
 

No comments

Powered by Blogger.