The third edition of the Sovereign Gold Bond scheme, a component of the government's market borrowing programme, will open on Tuesday, an official statement said.
"Applications for the bond will be accepted from March 8 to March 14. The bonds will be issued on March 29, " said the finance ministry statement.
These will be sold through banks, Stock Holding Corporation of India Ltd. (SHCIL) and designated post offices, it added.
The government received subscriptions of Rs. 726 crore for 2, 790 kg gold under the second tranche of sovereign gold bond scheme in January, while the first tranche of the scheme launched in November had received a subscription for 915. 95 kg of gold worth Rs. 246 crore.
The gold bonds are issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of 5 - 7 years with a rate of interest to be calculated on the value of the metal at the time of investment. The scheme has an annual ceiling of 500 grams per person.
Prime Minister Narendra Modi had last November launched the gold scheme aimed at reducing demand for the metal in physical form by encouraging people to buy gold in the demat or paper form.
India's gold imports increased to $26. 45 billion during the April - December period of the current fiscal, as compared to the $25. 85 billion worth imported in the same period of last year.
In Budget 2016 - 17, Finance Minister Arun Jaitley has proposed that redemption of these gold bonds be exempt from capital gains tax, as also that long - term capital gains arising on their transfer be eligible for indexation benefits.