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Sovereign Gold Bonds (SGB)

Sovereign Gold Bonds (SGB)


All you need to know about Sovereign Gold Bonds (SGB):

The smartest way to invest in gold is here. Sovereign Gold Bonds are Government of India’s securities denominated in gram of gold issued by the Reserve Bank of India. That simply means you can now invest in gold without the need to buy jewellery, gold coins or bars. Buying SGB means you are buying gold in paper or electronic (demat) form, thus getting rid of storage costs and fear of theft.

Added interest benefit: The biggest catch is that you earn interest at the rate of 2.75% p.a. on this, in addition to the appreciation of market price of gold.

What’s more: Safety is ensured because you are issued on behalf of the Government of India by the RBI. Thus, the Bonds will have a sovereign guarantee.

Know more about Sovereign Gold Bonds Scheme

  • SGBs are Government securities denominated in grams of gold (1 unit = 1 gram)
  • Issued by the Reserve Bank of India on behalf of the Government of India
  • Investors will earn returns linked to gold price
  • Additionally fixed interest of 2.75% p.a. payable semi-annually on the amount of initial investment
  • Bonds will carry sovereign guarantee both on redemption amount and on the interest
  • Minimum investment: 1 gram
  • Maximum investment: 500 grams
  • Available in DEMAT & Paper form
  • Tradable on Exchanges: NSE, BSE
  • Tenure: 8 years with an exit option from 5th year onwards


  • Safest: Zero risk of handling physical gold
  • Earn Interest: 2.75% assured interest per annum on the initial investment
  • Tax Benefits: No TDS applicable on interest Indexation benefit if bond is transferred
    before maturity
    Capital gain tax exempt on redemption
  • Assurance of Purity: RBI will announce the price before the issue date which will be fixed onthe previous week’s simple average of closing price of gold of 999 purity published by IBJA
  • Sovereign Guarantee: Both on redemption amount and on the interest
  • Easy Exit Option: The tenure of the bond is for 8 years with an option to redeem from 5th year onwards on the date on which interest is payable.
  • Ease of Borrowing Loan: Can be used as collateral for loans
  • Traded on Exchange: Tranche 1 trading commenced from June 13, 2016 onwards
Points Physical Gold Gold ETF Sovereign Gold Bonds
Returns Lower than actual return on gold Lower than actual return on gold Higher than actual return on gold
Safety Risk of handling physical gold High High
Purity of Gold Purity of gold always remains a question High as it is in Electronic Form High as it is in Electronic Form
Capital Gain Long term capital gain tax applicable after 3 years Long term capital gain tax applicable after 3 years Long term capital gain tax applicable after 3 years (No Capital gain tax if held till maturity)
Collateral against
Yes No Yes
Tradability / Exit Route Conditional Tradable on Exchange Tradable on Exchange Redemption – 5thyear onwards with GoI
Storage Cost High Very low Very low
View Comment (1)
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