Updated September 2026: The government has not issued any new Sovereign Gold Bonds since February 2024, and Budget 2026 changed how SGBs are taxed from 1 April 2026. This guide reflects the current rules.
Gold has been central to Indian financial and cultural life for millennia. Indian households are estimated to hold around 25,000 tonnes of gold – more than any country’s official reserves – most of it sitting in lockers and jewellery boxes. But physical gold has real drawbacks as an investment: storage and safety worries, making charges and wastage on jewellery, and no income while you hold it.
Sovereign Gold Bonds (SGBs) were launched in 2015 to fix most of these problems. For years they were the go-to way to own gold in India. Today the picture is different – you can no longer buy them from the government, and the tax benefit has narrowed. Here’s what SGBs are, how you can still buy them, and whether they still make sense for you.
What Are Sovereign Gold Bonds?
SGBs are government securities issued by the Reserve Bank of India on behalf of the Government of India. Each unit is linked to the price of one gram of 999-purity gold. When a bond matures, you receive the prevailing gold price in rupees – not physical gold – and while you hold it, you earn interest.
Can You Still Buy Sovereign Gold Bonds?
Not from the government. The last new issue was the 2023-24 Series IV in February 2024. The government has since said the scheme had become an expensive way for it to borrow, and no new issues have been announced for 2025-26 or 2026-27. Banks and brokers now list SGB subscriptions as discontinued.
You can still buy existing SGBs on the stock exchange. Previously issued bonds are listed on NSE and BSE and continue to pay interest and mature as originally promised. You can buy them through any demat and trading account, just like a share.
Key Features of Existing SGBs
- Interest: 2.5% a year (2.75% on some early series), paid every six months. Interest is calculated on the bond’s original issue price, not on what you pay for it – this matters if you buy on the exchange (see below).
- Maturity: 8 years from the issue date. At maturity you receive the average gold price of the previous three business days.
- Early exit: You can redeem with RBI from the fifth year onwards on interest payment dates, or sell on the stock exchange at any time.
- Safety: Backed by the Government of India, with no storage cost, theft risk or purity concerns.
How SGBs Are Taxed Now (From 1 April 2026)
SGBs used to be famous for tax-free gains at maturity for anyone who held them. Budget 2026 narrowed that. The exemption now applies only if you bought the bond in the original RBI issue and held it all the way to maturity.
| How you exit | Bought in original RBI issue | Bought on stock exchange |
|---|---|---|
| Held to maturity (8 years) | Tax-free | Taxable – 12.5% long-term capital gains |
| Early redemption with RBI (year 5 onwards) | Taxable – 12.5% long-term capital gains | Taxable – 12.5% long-term capital gains |
| Sold on exchange after more than 12 months | 12.5% long-term capital gains | 12.5% long-term capital gains |
| Sold on exchange within 12 months | Taxed at your slab rate | Taxed at your slab rate |
There is no indexation benefit on any of these. The 2.5% interest is taxed every year at your income tax slab rate as “income from other sources”. No TDS is deducted, so you must declare it in your ITR yourself.
How to Buy SGBs on the Stock Exchange
- Open a demat and trading account with any SEBI-registered broker, if you don’t have one.
- Search for “SGB” in your broker’s app. Each series has its own symbol, usually showing the issue month and year.
- Check the maturity date and how many years are left.
- Check trading volume. Many series trade thinly, so you may not get your price or quantity immediately.
- Compare the price with today’s gold price for one gram of 999 gold. SGBs can trade at a premium or a discount to it.
- Place a limit order rather than a market order, so you don’t overpay in a thinly traded series.
Is It Still Worth Buying SGBs on the Exchange?
It can be, but the maths is less attractive than it used to be. Two things to keep in mind:
- Your real interest rate is lower than 2.5%. Interest is paid on the original issue price. If a bond was issued at ₹5,000 per gram and you buy it at ₹10,000, you still get 2.5% of ₹5,000 – effectively 1.25% on what you paid.
- No tax-free maturity for you. Since you didn’t buy in the original issue, your gains at maturity are taxed at 12.5%, just like a gold ETF held for over a year.
On the plus side, you still get some interest income (which gold ETFs and gold funds don’t pay), government backing, and no expense ratio. If you can buy a series at or below the gold price and plan to hold it to maturity, it can still be a reasonable way to own gold.
SGBs vs Other Ways to Own Gold
| Option | Income | Long-term tax | Watch out for |
|---|---|---|---|
| SGBs (bought on exchange) | Yes, on issue price | 12.5% after 12 months | Thin trading; premium to gold price |
| Gold ETFs | No | 12.5% after 12 months | Expense ratio; needs a demat account |
| Gold mutual funds | No | 12.5% after 24 months | Slightly higher costs; but SIPs are easy |
| Physical gold | No | 12.5% after 24 months | Making charges, storage, purity |
| Digital gold (apps) | No | 12.5% after 24 months | Not regulated by SEBI or RBI |
For most people starting fresh today, a gold ETF (or a gold mutual fund if you want to invest monthly through a SIP) is the simplest option: easy to buy and sell, priced close to gold, with the same 12.5% long-term tax as an SGB bought on the exchange.
Already Hold SGBs? What to Do
- If you bought in an original RBI issue: holding to maturity is the only way to keep your gains tax-free. Redeeming early with RBI is now taxable, so think twice before exiting early unless you need the money.
- If you bought on the exchange: your gains are taxable however you exit, so choose based on price and your needs rather than waiting for maturity for tax reasons.
- Either way: keep declaring the interest in your ITR every year.
The Bottom Line
SGBs were one of the best ways Indians have ever had to own gold – but new issues have stopped, and the tax-free benefit now only helps people who bought in an original issue and hold to maturity. If you’re buying gold today, compare SGBs on the exchange with gold ETFs and gold funds on price, liquidity and costs, and keep gold to a modest slice of your overall portfolio.
Disclaimer: This article is for educational purposes only and is not investment or tax advice. Tax rules can change – please verify with official sources or consult a SEBI-registered investment adviser or a chartered accountant before investing. See our full Disclaimer.
