Sovereign Gold Bonds (SGBs) are a secure and convenient gold investment offered by the Reserve Bank of India (RBI). Compared to physical gold, SGBs provide multiple advantages, making them a preferred choice for investors.
What is a Sovereign Gold Bond?
Introduced in November 2015 under the Gold Monetisation Scheme, SGBs are government securities denominated in grams of gold. They allow investors to hold gold digitally without the risks associated with physical gold, such as making charges or purity concerns.
Investors purchase SGBs by paying the issue price in cash and can redeem them in cash upon maturity. These bonds are considered low-risk investments that also generate returns over time.
Sovereign Gold Bond Scheme Details
- Maturity Period: 8 years, with the option for premature redemption from the 5th year.
- Interest Rate: 2.50% per annum, paid semi-annually throughout the 8-year term.
- Minimum Investment: 1 gram of gold per investor.
- Maximum Investment: 4 kg of gold per investor (individuals and HUF). Entities like trusts and universities can invest up to 20 kg.
- Tradability: Issued exclusively by RBI on behalf of the Central Government and can be traded on stock exchanges.
- Tax Benefits: No capital gains tax on redemption.
- Loan Collateral: SGBs can be used as security for loans.
- Redemption Price: Calculated in rupees based on the average closing price of 999-purity gold over the previous three working days.
SGBs provide a safe, convenient, and profitable way to invest in gold digitally while enjoying interest earnings and tax benefits.
Sovereign Gold Bond 2025: Upcoming Issue
The upcoming issues of Sovereign Gold Bonds (SGBs) remain uncertain as the government plans to phase out this scheme. The RBI has not announced any SGB issuance for FY 2024-25, so currently, no bonds are open for subscription.
Here are the details of the last issued series:
Sovereign Gold Bond 2023-24 Series IV
| Subscription Period | Date of Issuance | Investment Limit | Interest | Issue Price Per Gram |
| 12 Feb 2024 – 16 Feb 2024 | 21 Feb 2024 | 1 gm to 4 kg | 2.5% p.a. | ₹6,263 (offline) ₹6,213 (online) |
Benefits of Sovereign Gold Bonds
- Government-backed security: SGBs provide guaranteed returns with a sovereign guarantee on both principal and interest.
- Annual interest: Earn 2.5% per annum on the issue price.
- Low-risk investment: Being backed by the government, SGBs are safer than physical gold.
- Tradability: Bonds can be traded on stock exchanges such as NSE or BSE after a specified period (usually after 5 years).
- Loan collateral: Some banks accept SGBs in Demat form as collateral for loans. Loan-to-value (LTV) is based on gold valuation determined by the India Bullion and Jewellers Association Limited.
Who Can Subscribe to SGBs?
Eligible investors include:
- Indian resident individuals
- Individuals on behalf of minors
- Trusts
- Hindu Undivided Families (HUFs)
- Charitable institutions
- Universities
How Do Sovereign Gold Bonds Work?
- Purchase SGBs through designated banks, SHCIL, or post offices.
- Online purchase: Bonds reflect in your Demat account portfolio.
Offline purchase: Collect the SGB certificate from issuing banks, SHCIL, post offices, or authorized agents. - Earn 2.5% interest per annum on your investment.
- Redemption: Bonds mature in 8 years, but premature redemption is allowed from the 5th year
How to Invest in Sovereign Gold Bonds?
Individuals can purchase Sovereign Gold Bonds (SGBs) through banks, the Stock Holding Corporation of India Limited (SHCIL), designated post offices, or recognised stock exchanges like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), either directly or via authorised agents.
SGBs are also available online through the websites of authorised commercial banks. The steps to buy SGBs online through a bank’s net banking portal are as follows:
- Log in to your internet banking account.
- Go to the ‘e-service’ section and select ‘Sovereign Gold Bond’.
- Review the terms and conditions, then click ‘Proceed’.
- Complete the registration form and click ‘Submit’.
- Provide nominee information and enter the quantity of subscription in the purchase form.
- Verify the details, click ‘Submit’, and make the payment.
- A confirmation message will be sent, and the bond certificate will be delivered to your email or Demat account.
Redemption of Sovereign Gold Bonds
An SGB reaches maturity after 8 years and is then eligible for final redemption. The redemption price is calculated as the simple average of the closing price of gold with 999 purity for the previous three working days, as published by the India Bullion and Jewellers Association Ltd (IBJA).
For instance, the RBI has fixed the final redemption price of ₹9,924 per unit for SGB 2017-18 Series II, which matures on 28 July 2025. This price is based on the average closing gold price between 21 July and 25 July 2025.
Premature Redemption of Sovereign Gold Bonds
Investors have the option of early redemption after completing 5 years from the issue date, aligned with the interest payment schedule. The redemption price is again based on the simple average of gold’s closing price (999 purity) over the previous three business days, as reported by IBJA.
For example, SGB 2020-21 Series VI will be available for premature redemption on 6 September 2025 at a price of ₹10,610 per unit, determined from the average closing prices recorded between 3 September and 5 September 2025.
Sovereign Gold Bond Price History
The price trend of Sovereign Gold Bonds (SGBs) for 2023–24 is as follows:
| Series | Month | Price per Gram |
| Series 1 | June 2023 | ₹5,926 |
| Series 2 | September 2023 | ₹5,923 |
| Series 3 | December 2023 | ₹6,199 |
| Series 4 | February 2024 | ₹6,263 |
For 2022–23, the SGB price history was as follows:
| Series | Month | Price per Gram |
| Series 1 | 28 June 2022 | ₹5,091 |
| Series 2 | 30 August 2022 | ₹5,197 |
| Series 3 | 27 December 2022 | ₹5,409 |
| Series 4 | 14 March 2023 | ₹5,611 |
Tax Rules on Sovereign Gold Bonds
SGBs do not qualify for tax deduction under Section 80C of the Income Tax Act. Additionally, the interest earned on these bonds is fully taxable and must be reported under ‘Income from Other Sources’ when filing returns. The applicable tax rate will depend on the individual’s income slab. Importantly, no Tax Deducted at Source (TDS) is applied on the interest.
That said, SGBs enjoy exemptions from capital gains tax in certain situations:
- On maturity: If held until the 8-year maturity, capital gains are fully exempt.
- On premature redemption: If redeemed through RBI after 5 years, the proceeds are also exempt from Long-Term Capital Gains (LTCG) tax.
If sold before maturity via stock exchanges or private transfer, gains are taxed as capital gains:
- Short-Term Capital Gains (STCG): For holding periods under one year, gains are taxed according to the investor’s income tax slab.
- Long-Term Capital Gains (LTCG): For holding periods over one year, gains were earlier taxed at 10% without indexation or 20% with indexation. However, for transfers made on or after 23 July 2024, the tax rate is 12.5% without indexation.
Sovereign Gold Bonds serve as a modern investment choice for individuals looking to diversify their portfolio with gold-backed assets.
How to Buy Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) can be purchased through nationalised banks, scheduled private banks, scheduled foreign banks, and designated post offices. Investors may choose any bank to invest in SGBs, though applying through the bank where you already hold an account is generally advisable.
Where Can Investors Get the SGB Application Form?
Application forms for SGBs are available at issuing banks, SHCIL (Stock Holding Corporation of India Limited) offices, and designated post offices. They can also be downloaded directly from the Reserve Bank of India (RBI) website.
Can SGBs Be Redeemed Before Maturity?
Yes. Although the maturity period for SGBs is 8 years, early redemption is allowed from the 5th year onwards. Premature redemption can be done on specific interest payment dates.
How to Sell Sovereign Gold Bonds?
SGBs can be sold on secondary markets through registered stockbrokers or transferred to another person using a Delivery Instruction Slip (DIS). Currently, only a few brokers such as Zerodha and Upstox facilitate SGB transactions in secondary markets.
If your broker does not support gold bond trading in secondary markets, you have alternatives:
- Sell via DIS slip to a known individual.
- Request your broker to place a sell order on the exchange.
- Open a Demat account with a broker that permits SGB trading and transfer your holdings using a DIS slip.
FAQ’s
Can Nominees Claim Sovereign Gold Bonds After the Investor’s Death?
Yes. A nominee can submit a claim to the bank where the investor purchased the bonds. In cases where no nominee is registered, legal heirs—such as executors, administrators, or holders of succession certificates—can file claims with the issuing bank, receiving office, or depository.
Are There Risks in Investing in Sovereign Gold Bonds?
The primary risk lies in a potential decline in gold prices, which could lead to capital loss. However, the number of gold units purchased remains intact. Since these bonds are government-backed, the default risk is virtually zero, making them one of the most secure investment options.
Is there a minimum and maximum limit for investing in SGBs?
Yes. The minimum investment is 1 gram of gold, while the maximum is 4 kilograms per individual and 20 kilograms for trusts and institutions in a financial year.
How is the interest on SGBs paid?
Investors earn a fixed interest of 2.5% per annum on the initial investment, credited semi-annually to the registered bank account.
Do I need a Demat account to invest in SGBs?
No, a Demat account is not mandatory. SGBs can be held in physical certificate form or in Demat mode, as per the investor’s preference.
Are Sovereign Gold Bonds tradable?
Yes, SGBs can be traded on stock exchanges (like NSE or BSE) once they are listed, though liquidity may vary depending on market demand.
Can NRIs invest in SGBs?
No, Non-Resident Indians (NRIs) are not permitted to purchase SGBs. However, if an investor becomes an NRI after purchasing, they can continue to hold the bonds until redemption or maturity.
What happens if I lose my SGB certificate?
A duplicate certificate can be issued by the issuing bank, post office, or SHCIL after verifying the investor’s details.
