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Sovereign Gold Bond

Updated: Jun 29, 2023

Sovereign gold bonds are government securities denominated in grams of gold. The bond is issued by Reserve Bank on behalf of Government of India. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption. Investors are assured of the market value of gold at the time of maturity and periodical interest


Eligible investors include individuals, HUFs, trusts, Universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till maturity.


Joint holding is allowed. The application on behalf of the minor has to be made by his/her guardian. Nomination facility is available.


The bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family sand 20 kg for trusts and similar entities.

The Bonds bear interest at the rate of 2.50 per cent per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal


Bonds are sold through offices or branches of Nationalised Banks, Scheduled private banks, Scheduled Foreign Banks, designated post offices, Stock Holding Corporation of India Ltd(SHCIL) and the authorised stock exchanges. A customer can apply online through the website of the listed scheduled commercial banks. The issue price of the Gold Bonds will be Rs.50 per gram less than the nominal value to those investors applying online

On maturity, the Gold Bonds shall be redeemed in Indian rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited.


The bonds can be held in demat account. The bonds are tradable from a date to be notified by RBI. It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges.


Tax Implications

Interest on the Bonds will be taxable as per the provisions of the income-tax Act, 1961(43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. TDS is not applicable on the bond.

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