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Government-backed bonds denominated in grams of gold. Earn 2.5% annual interest plus gold price appreciation with sovereign guarantee and tax benefits.
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are issued by the Reserve Bank of India on behalf of the Government of India and offer a superior alternative to holding physical gold.
Instead of buying physical gold coins or jewelry, you invest in these bonds and receive the equivalent value in grams of gold. The bond is denominated in multiples of 1 gram, with a minimum investment of 1 gram and maximum of 4 kg per person per year.
What makes SGBs unique is the dual benefit: you earn a fixed interest of 2.5% per annum on your investment (paid semi-annually), and at maturity, you receive the current market value of gold. The bonds have an 8-year tenure with an exit option after the 5th year.
SGBs combine the benefits of physical gold investment with the security of a government bond, while eliminating concerns about storage, purity, and making charges associated with physical gold.
Your investment value tracks the market price of gold. Get full appreciation benefits without physical storage.
Earn fixed 2.5% interest per annum on initial investment amount, paid semi-annually to your bank account.
Issued by RBI on behalf of Government of India. Backed by sovereign guarantee with zero credit risk.
Capital gains on redemption at maturity are completely tax-free. Only interest is taxed at your income tax slab.
8-year maturity with early exit allowed from 5th year onwards on interest payment dates.
Held in demat form. No concerns about storage, purity, theft, or making charges unlike physical gold.
Invest directly through RBI's Retail Direct platform. Open a Retail Direct Gilt account and apply during SGB tranches.
Visit RBI Retail Direct →Apply through scheduled commercial banks, Stock Holding Corporation of India Ltd (SHCIL), or authorized stock brokers.
Note: Online applications get ₹50/gram discount
Visit designated post offices during SGB issuance periods. Convenient for those who prefer offline application process.
Check with your local post office for availability
Buy from secondary market on NSE/BSE if you miss the subscription window. Trade existing SGBs like stocks through your trading account.
Prices may vary from issue price in secondary market
RBI announces SGB tranches periodically (usually monthly). Subscription windows are typically open for 5 days. Issue price is based on simple average of closing gold prices published by IBJA for the last 3 business days of the week preceding the subscription period.
| Aspect | Details |
|---|---|
Interest Income (2.5% p.a.) | Taxable as per income tax slab |
Capital Gains on Maturity | Completely Tax-Free |
Premature Redemption (after 5Y) | LTCG 12.5% without indexation |
Secondary Market Sale (<3Y) | STCG at slab rate |
Secondary Market Sale (>3Y) | LTCG 12.5% without indexation |
Wealth Tax | Not applicable |
The tax-free maturity redemption is a significant advantage over physical gold, where capital gains would be taxed at 12.5% LTCG. This can add 12.5% to your effective returns if held till maturity.
Example:
If gold price appreciates from ₹5,000/gram to ₹10,000/gram over 8 years, your ₹5,000 gain per gram is completely tax-free on maturity. With physical gold, you'd pay ₹625 per gram as LTCG tax (12.5% of ₹5,000).
Your investment value fluctuates with gold prices. Gold can be volatile in the short term due to global economic factors, currency movements, and demand-supply dynamics. If gold prices fall, your principal value decreases.
8-year maturity with early exit only allowed from 5th year onwards on interest payment dates. Your money is locked in for at least 5 years, limiting liquidity options during this period.
While SGBs are listed on exchanges, trading volumes can be low, leading to wider bid-ask spreads. May be difficult to exit at fair prices in secondary market before 5 years.
Common questions about Sovereign Gold Bonds
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Disclaimer: This content is for educational purposes only and does not constitute investment advice. Sovereign Gold Bonds are subject to market risks including gold price volatility and liquidity risk. Past performance of gold prices is not indicative of future returns. The information provided is based on current regulations which are subject to change. Please consult a SEBI-registered investment advisor and review the official RBI circulars before making investment decisions.