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Stock Market · Currency, Commodity & GSec

Sovereign gold bonds

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. Issued by RBI on behalf of the Government of India, they offer both gold price appreciation AND annual interest. A combination unavailable from physical gold or gold ETFs.

No new ones since February 2024

The government stopped issuing SGBs after the February 2024 tranche, because gold's rally made them an expensive way to borrow. Existing bonds keep running to maturity. The only way to buy one now is from another investor, on NSE or BSE.

Key features

• Denomination: minimum 1 gram, maximum 4 kg per person per financial year
• Tenor: 8 years (with exit option after 5 years on interest payment dates)
• Interest: 2.5% a year on the original issue price, paid every six months. Pay more than that on the exchange and the yield on your money is lower
• Issue price: set from the average gold price of the week before each issue (IBJA rate). On the exchange you pay the market price

Tax treatment, narrowed in 2026

Bought at the original issue and held to the full 8-year maturity: capital gains are COMPLETELY EXEMPT from tax.

Bought on the exchange: from 1 April 2026, no exemption, even at maturity. The gain is taxed at 12.5% past a year, at your slab rate inside it.

Exit any other way, the year-5 redemption window, or a sale on the exchange, and ordinary capital gains rules apply: 12.5% LTCG once you're past a year.

Interest income: taxable at slab rate, every year, regardless.

Gold ETF vs SGB, for money going in today: both track the same metal, and both gains are now taxed the same way. The SGB still adds 2.5% a year on its old issue price. A gold ETF gives that up and hands you the ability to sell any quantity on any trading day, against an annual expense ratio. The horizon you can genuinely commit to, and how thin the SGB's market is, decide between them.

How to buy, now

• New issues: none since February 2024
• Secondary market: existing SGBs trade on NSE/BSE through your demat, but liquidity is poor and the price can sit above or below gold's
• The ₹50 per gram online discount only ever applied at issue, so it is gone too

What is left of the case

For original holders the deal is intact: hold to maturity, collect all sixteen interest payments, and pay no tax on the gain. For anyone buying on the exchange today the case is thinner. The interest is paid on an old, lower price, the gain is taxed, and the way out is a thin market. Money that might be needed in a year or two leaves through that market, often at a discount. That is the question to settle before the instrument comparison, not after it.

Takeaway. No new SGBs since February 2024, so today you can only buy one on the exchange. That gets you the gold price plus 2.5% on its old issue price, but since April 2026 no tax-free gain at maturity. That exemption now belongs only to original-issue holders.