Golden Returns: Earn Interest and Capital Appreciation with Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) are government-issued securities that are denominated in grams of gold. As such, they provide a secure way to invest in gold, with the added benefit of offering potential capital gains alongside annual interest. Furthermore, SGBs also contribute to diversifying your investment portfolio.

Image Source: Zerodha

Key features:
  • Issued by RBI:

The Reserve Bank of India issues SGBs, ensuring a secure investment option.

  • Denominated in Grams:

These bonds use grams of gold to measure how much gold you have, so you can know exactly how much you own.

  • Fixed Interest Rate:

SGBs offer a steady 2.5% interest rate, providing stable income.

  • Tenor and Redemption:

SGBs have an eight-year tenor and permit premature redemption after the fifth year, exercisable on the interest payment date.

  • Redemption Options:

SGBs offer redemption in cash or physical gold, granting flexibility to investors.


SGB Issuance Dates:

SGBs are issued in tranches, and each tranche has a different maturity period.
The subscription period for the next tranche is between September 11 and September 15, 2023, and it will be issued on September 20.
Additionally, people who want to immediately purchase it can do so through the secondary market


Taxation of SGBs:
  • Interest Income:

Taxation of the 2.5% interest income aligns with the individual’s income tax slab, with no TDS applied.

  • Capital Gains:

When selling SGBs in the secondary market, capital gains taxes apply.
Sale within three years classify as Short-Term Capital Gains (STCG) and are taxed per the individual’s slab.
However, if you hold onto them beyond three years, it falls under Long-Term Capital Gains (LTCG), subject to a 20% rate with the added benefit of indexation.
Notably, it’s essential to remember that redeeming with the RBI after five years incurs no capital gains tax.

  • GST and STT:

Moreover, it’s worth mentioning that neither Goods and Services Tax (GST) nor Securities Transaction Tax (STT) apply to SGBs. This further enhances the tax efficiency for your investments.


Additional Information:
  • Minimum Investment: Accessible to a wide range of investors, the minimum investment in SGBs is just one gram of gold.
  • Maximum Investment: Investors may purchase up to 4 kg of gold per person per fiscal year through SGBs.
  • Interest Payment: SGBs pay interest semi-annually, ensuring regular income for investors.

Image Source: TRCapital




SGBs are a safe and secure way to invest in gold. Moreover, they offer the potential for capital gains, and they are also an excellent way to diversify your investment portfolio. Therefore, if you are looking for a way to invest in gold, SGBs are a good option to consider.

You can invest in Sovereign Gold Bonds with our partner, Zerodha.

You can signup with Zerodha here –> Sign up Here

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