New Delhi, Aug 30 (IANS): The government here on Tuesday announced to issue the fifth tranche of Sovereign Gold Bonds, the subscription of which will be open from September 1-9.

"The government, in consultation with the Reserve Bank of India (RBI), has decided to issue fifth tranche of Sovereign Gold Bonds. Applications for the bonds will be accepted from September 1, 2016 to September 9, 2016," the Finance Ministry said in a statement.

The Bonds will be issued on September 23.

The Sovereign Gold Bond, a financial asset, was launched by the government last year as an alternative to purchasing the metal gold. Accordingly, four tranches of issuances have been undertaken during 2015-16 and 2016-17 so far.

"The Bonds will be sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges - National Stock Exchange of India Limited and Bombay Stock Exchange," the statement said.

The investors will be compensated at a fixed interest rate of 2.75 per cent per annum payable semi-annually on the initial value of investment. The interest on Gold Bonds will be taxable as per the provision of Income Tax Act, 1961 (43 of 1961).

"The capital gains tax arising on redemption of Sovereign gold bond 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," it said.

The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The tenure 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.

"Minimum permissible investment will be 1 gram of gold. 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," the statement said.