Sovereign Gold Bond Scheme has been notified under which now you can invest in government securities denominated in grams of gold. The scheme is launched as a substitute for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. The government has made it attractive for investor by allowing the indexation of cost on these bonds which is quite good as the indexation benefit which inflate the cost by applying the Cost Inflation Index on the purchase price or cost , is not allowed on bonds. But , since this investment product is competing with physical gold investment, the govt. has allowed the same treatment which is given to gold .
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