Sovereign Gold Bonds: Taxation, How to Apply, SGB Vs Digital Gold, & More
Sovereign Gold Bonds (SGBs) have emerged as a popular alternative for Indian investors looking to benefit from gold without the worries of physical storage or purity concerns. Introduced by the Government of India in 2015, SGBs have accumulated nearly 147 tonnes in total subscriptions, valued at around ₹72,275 cr as of 2025. Investors are drawn not only by gold’s enduring appeal, but also by a fixed 2.5% annual interest (paid twice a year) and the potential for tax-free capital gains if held till maturity. SGBs are entirely government-backed, offering an added layer of trust and safety. Issuances surged in FY 2024, touching ₹270 bn, and past series have delivered impressive returns; for example, the 2018-19 Series V matured in July 2025 with around 205% total returns. With these advantages, SGBs stand out as a secure, tax-efficient, and hassle-free way to participate in gold’s long-term performance.
What are Sovereign Gold Bonds?
The Reserve Bank of India (RBI), on behalf of the Government of India, issues Sovereign Gold Bonds (SGBs). These are government securities denominated in grams of gold. The Sovereign Gold Bond Scheme allows investors to invest in gold without physically holding it. Instead of receiving physical gold, investors receive bonds that represent their SGB investment value linked to the market price of gold. This means that as gold prices fluctuate, so does the value of your SGB investment.
One of the key advantages of SGBs is that they offer a fixed interest rate along with potential capital appreciation based on the price of gold. This combination makes SGBs an attractive option for both seasoned investors and newcomers looking to diversify their portfolios.
Key Investment Details of Sovereign Gold Bonds
Investors need to know the facts. The gold bond price is determined by the average of the 999-purity gold rate for the last three working days preceding the subscription period. So you get a fair price for your investment.
Bonds are issued in grams of gold, so you can invest in smaller quantities rather than buying in bulk. Additionally, with a tenure of 8 years, you can consider SGB for long-term investment.
Eligibility Criteria for SGBs
Before you invest in Sovereign Gold Bonds, it’s essential to understand who is eligible to participate in this scheme. The following entities can apply for SGBs:
- Resident Individuals: Both salaried and self-employed individuals can invest.
- Hindu Undivided Families (HUFs): HUFs are eligible to invest in SGBs.
- Trusts and Charitable Institutions: These entities can also participate.
- Universities and Educational Institutions: Registered institutions can invest in SGBs.
How Do Sovereign Gold Bonds Work?
- Government-Backed Security: Issued by the Government of India via the Reserve Bank of India (RBI) as government-backed securities denominated in grams of gold.
- Investment Limits: The minimum subscription is one gram, with maximum limits applying per individual, Hindu Undivided Family (HUF), and trusts per financial year.
- SGB Maturity and Redemption: Bonds mature after eight years; early SGB redemption is allowed after five years on interest payment dates.
- Interest Income: Fixed interest rate of 2.5% per annum, paid semi-annually, in addition to any price appreciation in gold.
- Issue and Redemption Pricing: Issue and redemption prices are based on the average closing prices of gold (999 purity) published by the Indian Bullion and Jewellers Association Limited (IBJA).
- Holding Formats: Can be held in dematerialised (DEMAT) or physical certificate form, eliminating storage and purity concerns associated with physical gold.
- Taxation: Interest income is taxable as per applicable tax laws; capital gains on redemption are currently exempt for individual investors if held till maturity.
Eligibility Criteria for SGBs
Before you invest in Sovereign Gold Bonds in India, it’s essential to understand who is eligible to participate in this scheme. The following entities can apply for SGBs:
- Resident Individuals: Both salaried and self-employed individuals can invest.
- Hindu Undivided Families (HUFs): HUFs are eligible to invest in SGBs.
- Trusts and Charitable Institutions: These entities can also participate.
- Universities and Educational Institutions: Registered institutions can invest in SGBs.
How to Apply in SGBs?
While upcoming SGB gold bond tranches may not be confirmed, here’s how you can apply during issuance periods:
- Banks: Most scheduled commercial banks (excluding small finance and payment banks) facilitate applications.
- Post Offices: Designated post offices allow in-person applications.
- Online Platforms: Internet banking and digital platforms offer the convenience of applying online, often with a ₹50 per gram discount on the SGB issue price.
The minimum investment is 1 gram of gold, and the maximum limit is 4 kilograms per financial year for individuals and HUFs, while trusts can invest up to 20 kilograms. If authorities issue no new tranches, investors can explore gold bond investments in the secondary market.
Where and How to Buy Sovereign Gold Bonds?
Investors can purchase SGB gold bonds in india through the following channels during issuance periods, though upcoming tranches may not be confirmed:
- Scheduled Commercial Banks: Available through branches and online platforms (excluding small finance and payment banks).
- SHCIL: Stock Holding Corporation of India Limited facilitates SGB purchases and support services.
- Designated Post Offices: Selected post offices allow SGB applications during issue periods.
- Online Applications: SGB online purchases often include a ₹50 per gram discount on the SGB issue price.
- Stock Exchanges: If authorities issue no new tranche, you can buy previously issued SGB bonds on the BSE or NSE at current market prices.
With uncertainties about future tranches, the secondary market provides an alternative for investing in government gold bonds.
Sovereign Gold Bond Benefits
- No Physical Storage Risk: It may eliminate risks related to physical gold storage and purity verification.
- Additional Income Stream: Fixed interest payments provide an additional income stream beyond gold price appreciation.
- Tax Advantage: Exemption from capital gains tax on redemption if bonds are held until maturity, subject to prevailing tax regulations.
- Government Security: Government backing offers security compared to private gold investment options.
- Liquidity Through Trading: Tradable on stock exchanges, providing liquidity before maturity, although market prices may vary.
- Accessible Investment Size: Available in small denominations (starting at 1 gram), allowing accessible investment sizes.
- No Making or Storage Charges: No making charges or storage costs, and typically associated with physical gold purchases.
Understanding Interest Rates and Returns on SGBs
One of the standout SGB features is their attractive interest rate. Investors earn a fixed sovereign gold bond interest rate of 2.5% per annum, which is paid semi-annually. This means that every six months, you will receive interest payments directly credited to your bank account.
In addition to earning interest, investors benefit from capital appreciation linked to the market price of gold. At maturity, you will receive the market value of your investment based on prevailing gold prices at that time. This dual benefit makes SGBs an appealing choice for those looking to grow their wealth over time.
Premature Redemption and Maturity of SGBs
One of the most significant advantages of investing in SGBs is the premature redemption option. While the bond has an 8-year tenure, you can redeem after 5 years from the date of issue. This gives you liquidity before maturity.
To redeem your bond early, you need to submit a request through your bank or financial institution at least one day before an interest payment date. Upon maturity or redemption, both interest and principal will be credited to your bank account.
How to Trade and Transfer Sovereign Gold Bonds?
SGBs have liquidity options that make them more attractive as an investment. After holding them for one year, you can trade SGBs on recognised stock exchanges like NSE or BSE. This allows you to sell your bonds if you need funds or if the market is favourable.
Also, you can transfer SGBs, so you can gift or sell these flexible assets as and when needed.
Using SGBs as Collateral for Loans
Another advantage of SGBs is that they can be used as collateral for loans from banks and financial institutions. So you can leverage your investment without selling it, which gives you more financial flexibility when needed.
Taxation on Sovereign Gold Bond
Understanding the tax implications of Sovereign Gold Bonds (SGBs) is crucial for optimising your investment returns. Here’s a detailed overview of how SGBs are taxed in 2024:
1. Capital Gains Tax
- At Maturity: If you hold your SGBs until their full maturity period of 8 years, the capital gains are exempt from tax for individual investors. This exemption is one of the key benefits of investing in SGBs for long-term goals.
- Premature Redemption: If you redeem your bonds after the 5th year, through the RBI’s redemption window, the capital gains arising from such premature redemption are also exempt from tax for individual investors.
- Secondary Market Sale:
- Short-Term Capital Gains (STCG): If you sell your SGBs in the secondary market within 12 months, the gains are taxed at your income tax slab rate.
- Long-Term Capital Gains (LTCG): If held for more than 12 months before sale, LTCG is taxed at 12.5% without indexation benefits or 20% with indexation, depending on the holding period and applicable rules.
2. Interest Income
The interest earned on SGBs, currently fixed at 2.5% per annum and paid semi-annually, is fully taxable. It is categorised as “Income from Other Sources” and taxed according to your income tax slab rate. While this interest is not exempt, it provides a regular income stream for bondholders.
3. Tax Deducted at Source (TDS)
There is no Tax Deducted at Source (TDS) on interest income or at the time of redemption of SGBs. However, it is your responsibility to declare the interest earned and pay applicable taxes while filing your income tax returns.
4. Indexation Benefits
For SGBs bought in the secondary market, indexation benefits may be applicable in certain cases. These benefits reduce tax liability by adjusting the purchase price of the bonds for inflation. But after recent changes, some transfers may not be eligible for indexation, so please check the applicable tax rules for your case.
Union Budget 2024 has made some changes to SGBs. Please consult a tax professional or check the latest guidelines to be compliant and tax-efficient. By knowing these tax implications, you can take an informed decision on investing in Sovereign Gold Bonds and plan your taxes.
Sovereign Gold Bonds Price History
| Financial Year | Series | Month | Issue Price per Gram (₹) |
| 2023-24 | Series I | June 2023 | 5,926 |
| Series II | Sep 2023 | 5,923 | |
| Series III | Dec 2023 | 6,199 | |
| Series IV | Feb 2024 | 6,263 | |
| 2022-23 | Series I | June 2022 | 5,091 |
| Series II | Aug 2022 | 5,197 | |
| Series III | Dec 2022 | 5,409 | |
| Series IV | Mar 2023 | 5,611 | |
| 2021-22 | Series I | May 2021 | 4,777 |
| Series II | May 2021 | 4,842 | |
| 2015-16 | Series I | Nov 2015 | 2,684 |
| Series II | Jan 2016 | 2,600 | |
| Series III | Mar 2016 | 2,916 |
Potential Risks and Key Considerations
While Sovereign Gold Bonds come with numerous benefits, it’s essential for investors to consider certain risks:
- Market Risk: The value of SGBs fluctuates with changes in gold prices, which can be volatile due to various economic factors.
- Liquidity Risk: Although tradable after one year, selling SGBs before maturity may not always yield favourable returns depending on market conditions.
- Interest Rate Risk: Changes in prevailing SGB interest rates could affect overall gold bond returns compared to other fixed-income investments.
Understanding these risks will help you make informed decisions when considering an investment in SGBs.
Understanding the Upcoming Sovereign Gold Bond Issues
As of mid-2025, there are no new Sovereign Gold Bond issues announced for this year after the last tranche in February 2024. The pause is due to high gold prices and high borrowing costs for the government. Potential investors should monitor announcements from the Reserve Bank of India (RBI) or check with authorised banks and stock exchanges closer to the subscription period to confirm tranche availability.
If authorities do not issue the tranche, investors can purchase SGB bonds in the secondary market, where traders buy and sell previously issued government gold bonds. Prices in the secondary market depend on the current market value of gold and investor demand.
Can You Invest in SGBs in 2025?
As of now, investing in Sovereign Gold Bonds (SGBs) in 2025 may be limited or uncertain. Recent reports suggest that fresh issuances of SGBs may not occur in the near future due to various factors influencing the government’s financial strategy.
Current Situation
- Limited Issues: The government has reduced the frequency of new SGB issues. In 2023, only a few series were launched, and this trend will continue in 2025. Financial constraints and the government’s focus on managing its finances are the reasons for this.
- Market Purchase: While the government may limit new issues, you can still buy existing SGBs from the market. If you plan to invest in SGBs in 2025, you will have to buy them from stock exchanges where they are listed.
- Price: If you buy SGBs from the market, you need to consider the current sovereign gold bond price, which varies based on the gold market. This will impact your returns compared to buying during the issue period.
SGB vs Digital Gold
When choosing between SGB and Digital Gold, it’s essential to understand their features, returns, and tax implications. While SGB gold bonds are a secure government-backed investment, Digital Gold offers more liquidity and flexibility. Here’s a comparison to help you decide which gold bond is better for your financial goals.
| Parameter | Digital Gold | Sovereign Gold Bond (SGB) |
| What it is | Digitally purchased 99.9% pure 24K gold, serving as an alternative to buying physical gold | Government-backed bonds offering gold-linked returns and fixed interest |
| Who provides it | Offered via digital partners like SafeGold, MMTC-PAMP, and collaborating with various fintech apps | Issued by the Government of India, accessible through banks and exchanges, RBI-regulated |
| Smallest purchase size | As little as ₹10 | Investors must buy at least 1 gram |
| Accessibility | Buy and sell anytime, no fixed timings | Restricts premature redemption for 5 years; tradable on exchanges thereafter |
| Lock-in/Redemption | No lock-in; sell whenever desired | 5-year lock-in for early exit; full maturity at 8 years |
| Account Requirements | Just a valid mobile number to start | Demat or bank account required |
| SIP/Recurring Option | SIPs can be set up on a daily, weekly, or monthly basis | Not available |
| Physical Conversion | Can exchange for coins or jewellery easily | Cannot be converted into physical gold |
| Expense | 3% GST charged on buy and sell; no brokerage fees | Nominal transaction charges; no annual expenses |
| Taxation | Gains over 3 years are taxed at 20% with indexation | 20% tax post 3 years; exempt from capital gains tax if held till maturity |
| LTCG Tax | Taxed at 20% post 3-year holding with indexation | Tax-free capital gains if held for the full 8 years |
| How funds are used | Invested fully in 24K gold | Value linked directly to gold prices |
| Earnings | You may lease digital gold to select jewellers for 3-4% returns | Fixed 2.5% annual interest on face value |
| Capital appreciation | Gains/losses mirror changes in gold prices | Reflects a change in the gold price plus interest |
| Indexation for LTCG | Available; reduces tax liability | Available for bond tenure over 3 years |
| Liquidity | Buy/sell 24×7 with immediate settlement | Limited liquidity pre-maturity; secondary market is thin |
| Regulation | Not under SEBI or RBI regulation | Issued and regulated by the RBI |
To Wrap Up..
Sovereign Gold Bonds in India are a safe investment linked to gold prices. They also give fixed returns. It adheres to established eligibility criteria and involves a defined application process. The scheme offers specific tax treatment and liquidity features applicable to different investor types.
As you plan to invest in gold this year, keep an eye on the next issue announcement so you don’t miss out on this opportunity. Whether you want to hedge against inflation or just want to be exposed to one of the most reliable assets in history, Sovereign Gold Bonds is the modern solution for today’s investor.
Frequently Asked Questions on SGBs
Yes, banks, financial institutions and non-banking financial companies (NBFCs) accept SGBs as collateral for loans. The loan-to-value (LTV) ratio is as per RBI guidelines same as loans against physical gold. So SGBs are a dual-purpose investment giving returns and financial flexibility in the context of SGB government scheme.
SGBs have a tenure of 8 years. But you can exit the investment from 5th year onwards but only on interest payment dates. This provides partial liquidity for those who are considering SGB investment for retirement planning.
Yes, SGBs are tradable on stock exchanges within a specific time frame after issue. So you can buy or sell bonds in the secondary market even before 5th year. The price will be based on the gold price and market demand, reflecting SGB price trends.
Yes, the nomination facility is available for SGBs. You can nominate during purchase or add a nominee later. This ensures smooth transfer of bonds in case of the holder’s demise and supports your goals in SGB for wealth accumulation.
You can’t convert physical gold into SGBs. You can buy SGBs by paying cash during the subscription window or in the secondary market. But they serve as a substitute for physical gold investment, giving advantages over SGB vs physical gold.
If you lose your Sovereign Gold Bond certificate, you can request a duplicate from the issuing bank or RBI. To get it you need to provide proper identification and proof of investment as per procedures mentioned in the sovereign gold bond risks and rewards document.
You can apply for SGBs online or offline. Online applications have a discount on the issue price. You can apply through:
– Scheduled commercial banks (except small finance banks and payment banks).
– Designated post offices.
– Recognised stock exchanges like NSE and BSE.
– Stock Holding Corporation of India Limited (SHCIL).
This process shows the convenience of sovereign gold bond interest payout mechanism linked to your investment.
For any SGB-related queries, you can reach out to your bank or financial institution where you purchased the bond. They will be able to help you with the application process, redemptions, trading options or any other SGB-related queries.
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