What is the interest rate on Sovereign Gold Bonds?▼
SGB pays 2.5% per annum on the initial investment amount. Interest is paid semi-annually (every 6 months) directly to your bank account. This is in addition to any gold price appreciation.
Are Sovereign Gold Bond returns tax-free?▼
Capital gains on SGB are completely tax-free if you hold till maturity (8 years). The semi-annual interest is taxable as per your income tax slab. If you sell before maturity, LTCG tax of 12.5% applies (after 12 months holding, without indexation from July 2024).
Can I exit SGB before 8 years?▼
Yes, early redemption is allowed after the 5th year on interest payment dates. You can also sell on stock exchanges after listing (usually 2 weeks after issue). However, only maturity redemption gives you tax-free capital gains.
How is SGB better than physical gold?▼
SGB offers: (1) 2.5% annual interest that physical gold doesn't provide, (2) no making charges or wastage, (3) no storage/insurance costs, (4) no purity concerns, (5) tax-free capital gains on maturity, (6) can be used as collateral for loans.
What is the maximum investment in SGB?▼
Individuals can invest in a minimum of 1 gram and maximum of 4 kg per financial year. For trusts and similar entities, the limit is 20 kg per financial year. The issue price is based on simple average of closing price of 999 purity gold for the last 3 business days.
How to buy Sovereign Gold Bonds?▼
SGBs can be purchased through: (1) Banks (online/offline), (2) Stock exchanges (NSE/BSE), (3) Post offices, (4) Stock brokers (Zerodha, Groww, etc.). RBI issues new tranches periodically. You get ₹50/gram discount for online purchase.