Sovereign Gold Bond Scheme (SGB)

Sovereign Gold Bonds are Government securities denominated in multiples of gram(s) of gold. They are substitute for investment in physical gold. To buy the bond, investor has to pay the issue price in cash to an authorised SEBI Broker. On redemption, cash is deposited into the investor’s registered bank account. These Bonds are issued by the Reserve Bank of India on behalf of the Government of India and are traded on stock exchange

Key Features

The bond bears an interest at the rate of 2.50% (fixed rate) per annum on the nominal value.

Interest will be credited semi-annually to the investor’s account and the last interest will be payable on maturity along with the principal

Investors will earn returns linked to gold prices

Bond carry sovereign guarantee both on redemption amount and on the interest

Minimum investment: 1 gram. Maximum investment: 4 Kgs for individual, 4 Kgs for HUF and 20 Kgs for trust and similar entities per fiscal (April-March)

Available in DEMAT and paper form

Tradable on National Stock Exchange of India Limited

Issuance through trading members of NSE


Safest: Zero risk of handling physical gold.

Earn Interest: 2.50% assured interest per annum on the issue price.

Tax Benefits: No TDS applicable on interest Indexation benefit if bond is transferred before maturity Capital gain tax exempt on redemption

Assurance of Purity: Gold bond prices are linked to price of gold of 999 purity (24 carat) published by IBJA.

Sovereign Guarantee: Both on redemption amount and on the interest

Easy Exit Option: The tenor of the bond is for 8 years with an option to redeem from 5th year onwards on the date on which interest is payable

Traded on Exchange: All earlier issuance of SGB are available for trading on NSE

Ease of Borrowing Loan: Can be used as collateral for loans

Comparison of Physical gold, Gold ETF and Sovereign Gold Bond


Physical Gold

Gold ETF

Sovereign Gold Bond


Lower than actual return on gold

Lower than actual return on gold

Higher than actual return on gold


Risk of handling physical gold



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 applicable after 3 years

Long term capital gain applicable after 3 years

Long term capital gain applicable after 3 years. ( No Capital gain tax if held till maturity )

Collateral against Loan




Tradability / Exit Route


Tradable on Exchange

Tradable on Exchange. Redemption- 5th year onwards with GoI

Storage Cost


Very Low

Very Low

Where can you buy it?

Investors can apply for the bond through SEBI authorized trading members and financial advisors of National Stock Exchange of India Limited and other channels specified by RBI. Application forms will be provided by trading members, authorized agents and can also be downloaded from RBI’s website.

RBI Circulars:

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