Investment Products
A government-backed digital gold investment scheme that combines the security of sovereign guarantee with the benefits of gold ownership, offering fixed interest income and potential capital appreciation.
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold, issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They represent a digital alternative to physical gold investment, providing investors with the benefits of gold ownership without the hassles of storage, security, and making charges.
SGBs offer a unique combination of fixed interest income (2.50% per annum) and capital appreciation linked to gold prices. These bonds have an 8-year tenure with an option for early redemption after 5 years, making them suitable for long-term investors seeking gold exposure with government backing.
As a government-backed instrument, SGBs provide sovereign guarantee, ensuring complete safety of your investment. They are an ideal choice for investors looking to diversify their portfolio with gold while earning regular interest income and enjoying tax benefits on long-term capital gains.
Why Invest in SGBs
Discover why Sovereign Gold Bonds are an excellent choice for digital gold investment
Issued by RBI on behalf of the Government of India, providing sovereign guarantee and complete safety of your investment.
Earn 2.50% per annum interest, paid semi-annually, providing regular income along with gold price appreciation.
Digital gold investment eliminates the need for physical storage, insurance, or security arrangements for your gold holdings.
Unlike physical gold, SGBs have no making charges, wastage, or purity concerns. You get pure gold value.
Benefit from gold price movements while earning fixed interest, providing dual returns on your investment.
Long-term capital gains are exempt if held till maturity (8 years), with indexation benefits for early redemption.
Essential information about investing in Sovereign Gold Bonds
1 gram of gold
4 kg per individual per financial year (HUF: 4 kg, Trust: 20 kg)
8 years with early redemption option after 5 years
2.50% per annum, paid semi-annually
| Category | Maximum Investment per Financial Year |
|---|---|
| Individual | 4 kg |
| Hindu Undivided Family (HUF) | 4 kg |
| Trust | 20 kg |
Understanding the mechanism and lifecycle of Sovereign Gold Bonds
RBI issues SGBs in multiple tranches throughout the financial year. Each tranche has a specific subscription period, typically 5-7 days. The issue price is determined based on the simple average of the closing price of gold of 999 purity for the last 3 business days before the subscription period.
Investors earn a fixed interest rate of 2.50% per annum on their initial investment amount. The interest is calculated on the issue price and paid semi-annually, i.e., every 6 months. The interest is credited directly to the bank account linked to your SGB investment.
SGBs have a lock-in period of 5 years from the date of issue. During this period, you cannot redeem your bonds. However, after 5 years, you can redeem them on interest payment dates. If held till maturity (8 years), you receive the redemption amount based on the prevailing gold price.
SGBs are listed on stock exchanges and can be traded after the lock-in period. You can sell them in the secondary market or redeem them directly. Early redemption (after 5 years) is allowed only on interest payment dates, while redemption at maturity (8 years) is based on the prevailing gold price.
Investment Growth
Illustration of how your SGB investment grows with gold price appreciation and fixed interest income
*Chart is for illustration purposes. Actual returns depend on gold price movements and market conditions.
Understanding the tax implications and benefits of investing in SGBs
Interest earned on SGBs is taxable as per your income tax slab. It is added to your total income and taxed accordingly.
If held till maturity (8 years), capital gains are completely exempt from tax, making it a tax-efficient long-term investment.
If redeemed after 5 years but before maturity, indexation benefit is available, reducing your tax liability significantly.
If sold on stock exchanges, long-term capital gains tax applies with indexation benefit, making it tax-efficient.
| Tax Aspect | SGBs | Physical Gold | Gold ETF |
|---|---|---|---|
| Interest/Dividend | Taxable | N/A | N/A |
| Capital Gains (Held 3+ years) | Exempt (if held 8 years) | 20% with indexation | 20% with indexation |
| Indexation Benefit | Available (early exit) | Available | Available |
Investment Comparison
Compare different gold investment options to make an informed decision
| Feature | SGBs | Physical Gold | Gold ETF |
|---|---|---|---|
| Government Backing | Yes | No | No |
| Fixed Interest | 2.50% p.a. | No | No |
| Storage Risk | No | Yes | No |
| Making Charges | No | Yes (8-12%) | No |
| Tax on Maturity | Exempt | Taxable | Taxable |
| Liquidity | After 5 years | Immediate | Immediate |
| Minimum Investment | 1 gram | 1 gram | 1 unit (~0.01 gram) |
Suitability
SGBs are ideal for long-term gold investors who want government backing, fixed income, and tax benefits without storage concerns.
Simple steps to invest in Sovereign Gold Bonds
Check for the latest SGB tranche availability and subscription dates announced by RBI.
Ensure you have Aadhaar, PAN, and a valid bank account. Complete KYC requirements with the bank or post office.
Submit your application through banks, post offices, or stock exchanges during the subscription period with payment.
Receive confirmation and bond certificate. Interest will be credited semi-annually to your linked bank account.
Key information every SGB investor should know
SGBs are denominated in grams of gold. The issue price is based on the simple average of the closing price of gold of 999 purity for the last 3 business days before the subscription period, as published by the India Bullion and Jewellers Association Limited (IBJA). The redemption price is similarly calculated based on the prevailing gold price.
Interest at the rate of 2.50% per annum is paid semi-annually on the initial investment amount. The interest is calculated from the date of issue and credited to your bank account on fixed dates. The interest payment dates are mentioned in your bond certificate.
Early redemption is allowed after 5 years from the date of issue, but only on interest payment dates. The redemption price is based on the simple average of the closing price of gold of 999 purity for the last 3 business days before the redemption date. Indexation benefit is available for capital gains tax calculation.
SGBs can be used as collateral for loans from banks and financial institutions. The loan-to-value ratio and interest rates depend on the lending institution's policies. This provides liquidity without having to sell your SGB holdings, especially during the lock-in period.
You can nominate a beneficiary for your SGB holdings. In case of the bondholder's death, the bonds can be transferred to the nominee or legal heirs. The transfer process is straightforward and can be completed through the issuing bank or post office.
Frequently Asked Questions
Find answers to the most commonly asked questions about Sovereign Gold Bonds
The minimum investment in SGBs is 1 gram of gold. The maximum investment limit is 4 kg per individual per financial year. For Hindu Undivided Family (HUF), the limit is 4 kg, and for trusts, it is 20 kg per financial year.
Yes, you can redeem SGBs after completing 5 years from the date of issue. Early redemption is allowed only on interest payment dates. If you hold SGBs till maturity (8 years), you will receive the redemption amount based on the prevailing gold price at that time.
Interest on SGBs is paid at a fixed rate of 2.50% per annum, calculated on the initial investment amount. The interest is credited to your bank account semi-annually, i.e., every 6 months. The interest payment dates are fixed and mentioned in the bond certificate.
Interest income from SGBs is taxable as per your income tax slab. However, capital gains are tax-exempt if you hold SGBs till maturity (8 years). If you redeem early (after 5 years), indexation benefit is available for capital gains tax calculation. If sold on stock exchanges, long-term capital gains tax applies with indexation benefit.
Yes, SGBs are listed on stock exchanges and can be bought and sold in the secondary market after the lock-in period. However, if you purchase SGBs from the secondary market, you will not be eligible for the tax exemption on capital gains at maturity. The tax benefits are available only to the original subscriber who purchased during the issue period.
If you hold SGBs till maturity (8 years), you will receive the redemption amount based on the simple average of the closing price of gold of 999 purity for the last 3 business days before maturity. The capital gains on redemption are completely exempt from tax, making it a highly tax-efficient investment.
Yes, SGBs can be used as collateral for loans from banks and financial institutions. The loan-to-value ratio and terms depend on the lending institution's policies. This provides liquidity without having to sell your SGB holdings.
The issue price of SGBs is determined based on the simple average of the closing price of gold of 999 purity for the last 3 business days before the subscription period. The price is published by the India Bullion and Jewellers Association Limited (IBJA) and is fixed for each tranche.
SGBs are digital gold investments backed by the government, offering fixed interest income, no storage concerns, no making charges, and tax benefits. Physical gold requires storage, insurance, and involves making charges (8-12%), but offers immediate liquidity. SGBs provide the benefits of gold investment without the hassles of physical ownership.
Yes, Non-Resident Indians (NRIs) can invest in SGBs, but only on a non-repatriable basis. The investment must be made in Indian Rupees through their NRO (Non-Resident Ordinary) account. The interest and redemption proceeds will be credited to the NRO account and cannot be repatriated outside India.
Get expert guidance on SGB investment from our experienced team. Learn about the latest SGB tranche, understand the investment process, and make informed decisions about your gold investment portfolio.
Our team will help you understand SGB investment, check tranche availability, and guide you through the application process.
Important Disclaimer
Sovereign Gold Bonds (SGBs) are subject to market risks. Gold prices may fluctuate, and the value of your investment may go up or down based on gold price movements. The interest rate is fixed at 2.50% per annum, but the redemption value depends on the prevailing gold price at the time of redemption. Past performance does not guarantee future results. Please read the scheme information document and terms & conditions carefully before investing. Interest rates and terms are subject to change as per RBI guidelines. This information is for educational purposes only and should not be considered as investment advice. Consult with a qualified financial expert before making investment decisions.
