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SGB

Explore Sovereign Gold Bonds (SGB)

Sovereign Gold Bonds (SGB) are government securities denominated in grams of gold, issued by the Reserve Bank of India (RBI) on behalf of the Government of India. Investing in SGBs helps diversify your portfolio by adding an asset class like gold. It aids in potential wealth creation as the value of gold tends to appreciate over time. SGBs are suitable for investors who have a long-term investment horizon and have an affinity for gold as an investment option.

what is gold bond

Explore Sovereign
Gold Bonds (SGB)

how to invest in gold bonds

What are SGBs?

SGBs are a financial instrument introduced by the Government of India to provide individuals the opportunity to invest in gold without physically owning it. They are issued in multiple tranches throughout the year and carry a specific tenor, usually ranging from 8 to 12 years. SGBs offer a return linked to the price of gold and provide investors with an assured interest rate of 2.50% per annum.

Benefits of SGBs

taxes on gold bonds

Tax implications of
SGBs

Interest earned on SGBs is taxable as per the income tax slab of the investor. However, capital gains arising at maturity are exempt from capital gains tax. In case of a premature exit from the investment, capital gains tax may be applicable as per prevailing tax regulations.

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taxes on gold bonds

Risks associated with
SGBs

    • Market Risk

    The value of SGBs can fluctuate based on the prevailing market price of gold, which may affect the returns at the time of redemption/sale.

  • Liquidity Risk

    SGBs have a limited secondary market, making it challenging to sell them before maturity.

  • Interest Rate Risk

    Changes in prevailing interest rates can impact the secondary market price of SGBs.

  • Sovereign Risk

    While SGBs are backed by the Government of India, there is still a theoretical risk of default, although highly unlikely.

Frequently Asked Questions

How can I invest in SGBs?

What is the minimum investment amount for SGBs?

Can SGBs be used as collateral for loans?

Are SGBs tradable in the secondary market?

Can NRIs (Non-Resident Indians) invest in SGBs?

Insights about the market.

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