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Latest Update: Currently, there are no issue of SGBs.
For Indians, the reverence they have for gold is beyond its market value. Now there are ways to own gold without its inherent risks or bearing making and wastage charges. Sovereign Gold Bonds are one such alternative offered by the Government of India and the Reserve Bank of India (RBI). Here, you can own gold in ‘certificate’ format.
The Government of India introduced the Sovereign Gold Bond (SGB) in November 2015 under the Gold Monetisation Scheme to offer an alternative investment to physical gold. Over the years, the market has witnessed a considerable decline in the demand for physical gold. SGBs not only track the export-import value of the asset but also ensures transparency at the same time.
SGBs are government securities and are considered safe. Their value is denominated in multiples of grams of gold. SGBs have witnessed a significant increase in investors, with it being considered a substitute for physical gold.
The Finance Minister stated that the government is considering to close the Sovereign Gold Bond Scheme in 2025 during a media interaction after the Budget session.
Thus, there are no issues of SGBs now. The details of the last issue of SGBs are as follows:
Sovereign Gold Bond 2023-24 Series IV
Subscription Period | Date of Issuance | Investment Limit | Interest | Issue Price Per Gram |
12 February 2024 - 16 February 2024 | 21 February 2024 | 1 gm to 4 kg | 2.5% per annum | Rs. 6,263 |
The price history of SGB for FY 2023-24 is as follows:
Series | Month | Price per Gram |
Series 1 | June 2023 | Rs. 5,926 |
Series 2 | September 2023 | Rs. 5,923 |
Series 3 | December 2023 | Rs. 6,199 |
Series 4 | February 2023 | Rs. 6,263 |
Any Indian resident – individuals, Trusts, HUFs, charitable institutions, and universities – can invest in SGB. You may also invest on behalf of a minor.
Only RBI can issue SGBs on behalf of the Central Government, and they are traded on the Stock Exchange. It is issued in multiples of one gram of gold. Investors will receive a Holding Certificate for it. You can also convert it to Demat form.
You must follow the same Know-your-customer (KYC) norms as when you buy physical gold. You must complete KYC by submitting copies of identity proof such as a PAN Card and address proof such as a passport, driving license or Voter’s ID card for verification.
The interest on Sovereign Gold Bonds is taxable as per the provisions of the IT Act, 1961. In the case of SGB redemption, the capital gains tax applicable to an individual is exempted. Also, long-term capital gains generated are offered indexation benefits to an investor when transferring the bond from one person to another till 23 July 2024. The indexation benefits on capital gains are no longer available for SGBs transferred or sold after 23 July 2024.
If banks have acquired bonds after going through the process of invoking lien, hypothecation or pledging, then they accounted for SLR. The capital a commercial bank has to maintain in gold, cash, and approved securities before offering credit to customers is called Statutory Liquidity Ratio (SLR).
The redemption price must be in rupees, based on an average closing price of gold of 999 purity in the previous three working days.
The government sells bonds through banks, Stock Holding Corporation of India Limited (SHCIL), and selected post offices, as may be informed. The trading of SGBs also occurs via recognized stock exchanges (National Stock Exchange of India or Bombay Stock Exchange) directly or through intermediaries.
The receiving offices shall levy 1% of the overall subscription amount as commission for the bond distribution. From this commission, they will share at least half with intermediaries (agents or brokers).
The maturity period of the sovereign gold bond is eight years. However, you can choose to exit the bond from the fifth year (only on interest payout dates).
When the issued SGB completes 8 years, it comes up for final redemption. The price for final redemption is determined based on the simple average closing price of gold with 999 purity in the previous three working days, as reported by the India Bullion and Jewellers Association Ltd (IBJA).
The RBI has fixed the final redemption price of Rs.8,624 per unit of SGB for the SGB launched in March 2017, which is due for final redemption on 17 March 2025. This price fixed is based on the simple average of closing gold price for the week of 10-13 March 2025.
The price for redemption is determined based on the simple average closing price of gold with 999 purity in the previous three working days, as reported by the India Bullion and Jewellers Association Ltd (IBJA).
Investors can initiate early redemption of their SGBs after the fifth year from the date of SGB issuance, coinciding with the interest payment date. SGB 2019-20 Series X is up for premature redemption starting from 11 March 2025 at a price of Rs. 8,596 per unit per SGB.
The current interest rate for SGB is 2.50% per annum on your initial investment. It is paid twice a year (semi-annually) for 8 years, i.e. till maturity. Interest will be credited directly to your account, which you shared while investing. Returns are usually linked to the current market price of gold.
The value of the bonds is assessed in multiples of gram(s) of gold, wherein the basic unit is 1 gram. The minimum initial investment is 1 gram of gold, and the upper limit is 4 Kg of gold per investor (individual and HUF). For entities such as trusts and universities, 20 Kg of gold investment are permissible.
A person can apply for a Sovereign Gold Bond through their banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges, such as the Bombay Stock Exchange and National Stock Exchange of India Limited, either directly or through agents.
SGBs can also be bought online through the commercial banks’ websites authorised to sell them. The process to purchase SGBs through a bank’s online website is as follows:
When you have purchased a Sovereign Gold Bond online with a Demat account, it will reflect in the portfolio after the SGB issuance. In case of offline purchase, a person can collect the SGB certificate of holding from the issuing bank, post offices, SHCIL offices, designated stock exchanges or agents. The RBI will mail the digital copy of the holding certificate to the email address entered in the application form.
The customers will be issued the holding certificate on the SGB issuance date. If a person has opted to receive the physical form of certificate, it will be mailed to the registered email ID; otherwise, it will reflect in the Demat account on the SGB issuance date. Customers can also collect the certificate of holding from the bank branch.
There are no tax deduction benefits for the lump sum deposit of SGBs under Section 80C of the Income Tax Act. The interest given on SGB deposits is also not tax-free. The interest amount must be declared under ‘Income from Other Sources’ during tax returns. The income tax will be as per the individual’s income tax slab. Tax Deducted at Source (TDS) is not applicable on SGBs. However, they are exempt from capital gains tax when held till maturity.
Particulars | Physical Gold | Gold ETF | Sovereign Gold Bond |
Returns/earnings | Lower than the real return on gold due to making charges | Less than actual return on gold | More than actual return on gold |
Safety | Risk of theft, wear/tear | High | High |
Purity | The purity of gold always remains a question | High as it is in electronic form | High as it is in electronic form |
Gains | LTCG after two years | Long-term capital gain post after two years | LTCG post two years. (No capital gain tax if redeemed after maturity) |
As loan collateral | Accepted | Not accepted | Accepted |
Tradability or exit formalities | Restrictive | Tradable on Stock Exchange | Can be traded and redeemed from the 5th year with the government |
Storage expenditures | High | Minimal | Minimal |
Gold Sovereign Bonds are new-age investment vehicles for those interested in diversifying their portfolio with gold holdings.
How to Buy Sovereign Gold Bonds Online?
Gold Investment in India- How to Invest, Options, Benefits
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