Sovereign Gold Bonds (SGB): Interest, Tax Benefits & Redemption (2025 Guide)
Sovereign Gold Bonds (SGB) are one of the smartest ways for Indians to invest in gold without worrying about storage, purity, or making charges. Backed by the Government of India and issued by the Reserve Bank of India (RBI), SGBs combine the price appreciation of gold with extra interest and attractive tax benefits, making them a powerful long-term wealth creation tool.
Note: Exact interest rates, issue prices, and tranche dates change over time; always check the latest RBI or bank communication before investing.
What Are Sovereign Gold Bonds (SGB)?
Sovereign Gold Bonds are government securities denominated in grams of gold. Instead of buying physical gold, you buy these bonds to beat inflation. Use our Inflation Calculator to see how gold preserves your purchasing power over time.
Why SGB Is Better Than Physical Gold
- Zero Charges: No making charges or wastage.
- 100% Purity: Benchmark 999 gold.
- Zero Risk: No storage or theft worry (Demat).
- Extra Income: Earn 2.5% interest annually.
- High Cost: Making charges (8-25%).
- Wastage: Loss on resale/exchange.
- Storage Risk: Theft, locker charges.
- Zero Income: Does not generate passive cash.
Tax-Free Capital Gains (8 Years)
Maturity Benefit
Capital gains arising at redemption on maturity (after 8 years) are exempt from income tax for individuals.
Interest Tax
The semi-annual interest (2.5% p.a.) is taxable. You can check your tax slab liability using our Income Tax Calculator.
How to Buy SGB
Premature Withdrawal Rules
- 1Early Redemption (RBI): From 5th year onwards on interest payment dates.
- 2Stock Exchanges: Sell anytime on NSE/BSE if held in Demat (High liquidity).
- 3Loan Against SGB: Use as collateral for loans instead of selling.
Quick Comparison
| Feature | SGB | Physical Gold | Gold ETF |
|---|---|---|---|
| Backed by | Govt of India | Self | Mutual Fund |
| Interest | 2.5% p.a. | No | No |
| Charges | Zero | Making/Storage | Expense Ratio |
| Maturity Tax | Tax-Free | Taxable | Taxable |
| Purity Risk | None | Yes | None |
Final Take
Sovereign Gold Bonds are ideal if you want long-term exposure to gold (5–8 years) without storage or purity worries.
- Earn 2.5% extra interest on top of gold price.
- Enjoy Tax-Free maturity after 8 years.
- Combines cultural comfort with financial intelligence.
Fincado Research Team
Fact CheckedOur analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.
Disclaimer: Sovereign Gold Bond details (interest rates, issue dates) are subject to RBI notifications. Gold prices are subject to market risks. This article is for educational purposes only and does not constitute financial advice.