Sovereign Gold Bonds (SGB) Guide: Benefits & How to Buy

What are Sovereign Gold Bonds?

SGBs are government securities denominated in grams of gold, acting as a safe substitute for holding physical gold, issued by the RBI.

What is the interest rate on SGB?

SGBs offer a fixed interest rate of 2.5% per annum on the nominal value of the investment, paid semi-annually.

What is the maturity period of SGB?

The maturity period of the bond is 8 years. However, early exit options are available from the 5th year on interest payment dates.

Are capital gains on SGB taxable?

If held until the full 8-year maturity, the capital gains are completely exempt from tax. If sold earlier on stock exchanges, standard capital gains taxes apply.

What is the minimum and maximum investment limit for SGB?

The minimum investment is 1 gram of gold. The maximum limit for individuals and HUFs is 4 kg of gold per financial year.

How is the price of SGB calculated?

The price is based on the simple average of the closing price of 999 purity gold published by the India Bullion and Jewellers Association (IBJA) for the last three working days.

Can I sell SGB before maturity?

Yes, SGBs are listed on stock exchanges (NSE/BSE) within a few weeks of issuance, allowing you to trade them if you have a Demat account.

Can I take a loan against Sovereign Gold Bonds?

Yes, SGBs are accepted as collateral by banks, and you can secure loans against them up to the loan-to-value ratio of physical gold.

Is there any GST or making charges on SGB?

No, SGBs are fully digital, carrying ₹0 making charges, ₹0 locker fees, and 0% GST, unlike physical jewelry which charges 3% GST.

How do I apply for SGB?

You can apply online through your commercial bank's internet banking portal, demat account apps (like Zerodha), or visit designated post offices.

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