® 
Is your Credit Score >750?
- Get low interest loans & Lifetime FREE credit cards
- Get customized Credit Health Report
- Improve your creditworthiness
Get your FREE Credit Score & Report in just 2 minutes
In India, we have several investment options available to diversify our savings portfolio. Apart from investing in fixed deposits and mutual funds, investing in gold has always been a favourite option for people in our country.
In the past few years, people who like investing in gold have got a lucrative investment option - Sovereign Gold Bond (SGB). These bonds are government-backed investment options, that allow you to invest in gold without the risk of physically owning it.
In this guide, we’ll learn all about investing in sovereign gold bonds, the benefits, interest rates, the next issue date, and how to buy them online.
What is a Sovereign Gold Bond?
The Indian government introduced Sovereign Gold Bonds (SGBs) in November 2015 as a way to invest in gold without buying physical gold. This came as demand for physical gold fell. SGB values mirror the fluctuating gold market with complete visibility.
These bonds are government securities, so they are safe. You can buy them in units of grams of gold. More and more people are investing in SGBs instead of physical gold.
Choose an SGB by contacting either a SEBI-approved agent or broker. When you sell the bond, you will get the money (based on the current gold price) in your bank account.
Why You Should Consider Investing in a Sovereign Gold Bond
Absolute Safety
Sovereign Gold Bonds are safer than physical gold. No added charges are paid for design or upkeep. Plus, SGBs earn interest, unlike physical gold.Extra Income
You get a guaranteed interest of 2.50% per year on your investment.Tax Benefits
If you hold SGBs for a long time, you can get tax benefits. Your investment and its returns are under government protection.Easy to Buy and Sell
You can buy and sell SGBs on the stock market after five years.Use as Collateral
Some banks let you use SGBs as security for loans. The value of the loan depends on the gold price.Sovereign Gold Bond (SGB) 2024-25: Next Issue Date
As of now, there has been no official announcement about the next issue date for Sovereign Gold Bonds (SGBs) for the 2024-25 financial year.
The last Sovereign Gold Bond was issued on 12 February 2024.
However, based on past trends, the next SGBs are expected to be released around September 2024 and December 2024 after that.
Important Points to Remember:
- The Reserve Bank of India (RBI) usually issues SGBs in multiple tranches throughout the financial year (April to March).
- It's essential to keep an eye on official announcements from the RBI or the Ministry of Finance for accurate information regarding the issue dates.
Sovereign Gold Bond 2023-24 Series IV: Key Details
Feature | Details |
|---|---|
Subscription Period | 12 February 2024 - 16 February 2024 |
Date of Issuance | 21 February 2024 |
Investment Limit | 1 gram to 4 kilograms |
Interest Rate | 2.5% per annum |
Issue Price Per Gram | ₹6,263 |
The Sovereign Gold Bond 2023-24 Series IV allows you to invest in gold with the convenience of digital management. During the subscription period, you can buy bonds in amounts ranging from 1 gram to 4 kilograms. The bonds offer an annual interest rate of 2.5% and are priced at ₹6,263 per gram.
Sovereign Gold Bond (SGB) Price History for the Past 2 Years
FY 2023-24
Series | Month | Price/ Gram |
|---|---|---|
Series 1 | June 2023 | INR 5,926 |
Series 2 | September 2023 | INR 5,923 |
Series 3 | December 2023 | INR 6,199 |
Series 4 | February 2023 | INR 6,263 |
FY 2022-23
Series | Month | Price/ Gram |
|---|---|---|
Series 1 | June 2022 | INR 5,041 |
Series 2 | August 2022 | INR 5,091 |
Series 3 | December 2022 | INR 5,409 |
Series 4 | March 2023 | INR 5,611 |
Sovereign Gold Bond (SGB) Interest Rate
SGBs pay you 2.5% interest every year on your initial investment. You get this interest twice a year for eight years. The RBI will send the interest to the bank account you used to buy the bonds. The value of your SGBs changes with the price of gold.
Sovereign Gold Bond (SGB) Calculator
A Sovereign Gold Bond (SGB) calculator is a digital tool that helps you estimate the potential returns on your investment in SGBs.
It incorporates a range of factors such as:
- Initial investment amount: The total amount you plan to invest in SGBs.
- Gold price at the time of investment: The current market price of gold per gram.
- Interest rate: The fixed interest rate offered by the government on SGBs.
- Maturity period: The duration for which you hold the bonds.
How It Works
- Input information: You enter the required details into the calculator, such as the investment amount, gold price, and desired holding period.
- Calculates interest: The calculator calculates the interest earned on your investment based on the fixed interest rate of 2.5%.
- Determines maturity value: It calculates the total value of your investment at maturity, including the principal amount, interest earned, and the gold price at that time.
By using an SGB calculator, you can get a rough estimate of your potential earnings and compare different investment scenarios.
Note: While calculators provide a good estimate, the actual returns may vary based on fluctuations in the gold price and other market conditions.
Sovereign Gold Bond (SGB) - Steps to Buy Online
You can buy SGBs anytime on the stock market (BSE or NSE). Buying online saves you Rs. 50 per gram.
To buy SGBs directly from the government, follow these steps:
1. Log in to your online bank account.
2. Access "Sovereign Gold Bond" via the "eServices" section.
3. Read the rules, then click "Proceed".
4. Fill out the application and click "Submit".
5. Choose how many grams to buy and add your nominee's details.
6. Click "Submit" to finish.
Who Can Buy Sovereign Gold Bonds?
Eligibility for SGB investment includes:
- An Indian citizen
- A Hindu Undivided Family (HUF)
- Buying for a child
- A charity, trust, or university
- Investing with someone else
You cannot buy SGBs if you are:
- An Indian living abroad
- A private limited company
- A partnership
- A limited liability partnership
How to Check Your Sovereign Gold Bond
SGBs bought online are visible in Demat accounts following issuance.
If you bought your SGB offline, you can get a paper certificate from your bank, post office, or a special government office. The government will also send you a digital copy of the certificate to your email.
Sovereign Gold Bond Certificate
You will get your SGB certificate on the day the bond is issued. If you want a paper certificate, it will be emailed to you. Otherwise, you can find it in your Demat account. You can also get the certificate from your bank.
Sovereign Gold Bond Taxes
You can't reduce your taxes by investing in SGBs. The interest you earn on SGBs is not tax-free. You need to show this interest as income when you file your tax return. The tax you pay depends on how much money you earn. The government doesn't deduct any tax from your SGB interest. SGBs held to maturity are exempt from capital gains tax.
Risks of Buying SGBs
While SGBs are safer than buying physical gold, they still have risks.
- Gold prices change. The value of your SGBs goes up and down with the price of gold.
- Interest rates can change. If interest rates rise, SGBs might not be as good an investment.
- You might not be able to sell easily. Selling SGBs ahead of maturity can be complicated.
- The government can change the rules. The government might change the rules about SGBs, which could affect your investment.
Comparison of Physical Gold, Gold ETFs, and Sovereign Gold Bonds
Feature | Sovereign Gold Bonds (SGBs) | Physical Gold | Gold ETFs |
|---|---|---|---|
Returns/Earnings | Higher than actual returns on gold due to additional interest earnings | Lower than actual returns on gold due to making charges | Slightly less than the actual return on gold |
Safety | High | Risk of theft, wear and tear | High |
Purity | High, as it is held in electronic form | Purity is often a concern | High, as it is held in electronic form |
Gains | LTCG after two years; no capital gains tax if held until maturity | Long-Term Capital Gains (LTCG) after two years | Long-Term Capital Gains (LTCG) after two years |
As Loan Collateral | Accepted | Accepted | Not accepted |
Tradability/Exit Formalities | Tradable and redeemable from the 5th year onward with the government | Restrictive, often involves complex procedures | Easily tradable on the Stock Exchange |
Storage Expenditures | Minimal, as it's stored electronically | High, includes costs for safekeeping and insurance | Minimal, as it's stored electronically |
Frequently Asked Questions:
1. Is it safe to invest in sovereign gold bonds?
Yes, SGBs are very safe. The government backs them, so there's almost no chance of losing your money.
2. Which bank is best to invest in sovereign gold bonds?
You can buy SGBs from many banks, post offices, and other places. Choose a bank where you already have an account.
3. Are sovereign gold bonds tax-free?
No, you have to pay tax on the interest you earn from SGBs. But you don't pay tax when you sell the bonds after holding them for a long time.
4. Is the interest on sovereign gold bonds taxable?
Yes, you pay tax on the interest you earn from SGBs.
5. Is sovereign gold bond good investment?
A Sovereign Gold Bond can be a good investment for those looking to invest in gold with additional benefits. SGBs offer interest income (typically around 2.5% annually) on top of the potential appreciation in gold prices. They are safer than holding physical gold as they are issued by the government and have no storage costs. Additionally, there are tax advantages, such as exemption from capital gains tax if held until maturity. However, SGBs have a fixed tenure of 8 years with an option to exit after 5 years, so they may not be suitable for short-term investors.
6. Is SGB Better Than FD?
SGBs can be better than Fixed Deposits (FDs) for those seeking exposure to gold’s price appreciation and additional interest earnings. SGBs offer a fixed annual interest rate of 2.50% and potential capital gains if gold prices rise. In contrast, FDs provide guaranteed returns with fixed interest rates but lack the potential for capital growth. Your choice depends on whether you prefer stable returns or are willing to invest in gold for potentially higher gains.
7. How to sell sovereign gold bonds?
You can sell SGBs through some stockbrokers. If your broker can't help, you might need to find a different broker or sell to someone you know.
8. What happens after 8 years of sovereign gold bond?
After 8 years of holding a Sovereign Gold Bond, the bond matures. Upon maturity, the investor can redeem the bond and receive the current market value of the gold equivalent to the units they hold. The redemption amount is credited directly to the investor's bank account. Additionally, investors earn interest semi-annually at a rate of 2.50% per annum on the initial investment, which is separate from the redemption amount. If the investor prefers, they can also opt to extend the bond for an additional period of 3 years.
9. Can NRIs invest in sovereign gold bonds?
No, only Indian residents can buy SGBs.