Helping You Build Wealth With Honest Research
Since 1996. Try Now


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

2 Stocks to BUY
As Nifty50 Heads Towards 40,000

Get Full Details

**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.


How to Invest in Sovereign Gold Bonds?

How can you invest in Sovereign Gold Bonds?

Investment in SGBs is possible when open for subscription.

You need to fill out the application form (Form A), state the grams (units) of gold you wish to invest, your full name, residential address, email id, Permanent Account Number (PAN), nomination details, bank details, and valid identification documents, along with the application money.

The application form for investment in SGBs is available with the issuing banks and with designated Post Offices/agents. You may download the application form from the RBI's website.

It's possible to apply and purchase SGBs, both offline and online. But when you buy these bonds online, the issue price will be Rs 50 per gram lower than the nominal value per gram of gold.

Once the application form is duly filled, signed, and submitted with the valid document plus the application money, you receive the allotment.

On allotment, a ‘certificate of holding' is issued with a certificate number, stating the amount invested, the number of units allotted, issue date, maturity date, unique investor id, bank IFSC, and nominee details.

You also have the option to convert your holdings into dematerialised (demat) form.

What is the minimum and maximum you can invest in Sovereign Gold Bonds?

The minimum investment allowed is 1 gram.

The maximum investment limit is a subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year.

Note that, in the case of joint holdings, the limits shall apply to the first applicant.

The Benefits of Investing in Sovereign Gold Bonds

  • During the holding period, you, the investor, earn interest @2.50% p.a. (fixed rate) on the initial amount in SGBs. The interest earned is credited semi-annually to your bank account, and the last interest is payable on maturity along with the principal.
  • At the end of the tenure of 8 years, your SGBs are redeemed. The redemption price shall be based on a simple average of the closing price of gold of 999 purity of the previous 3 business days from the date of repayment, published by the India Bullion and Jewellers Association (IBJA).
  • When you redeem your investment in SGBs, both the interest and redemption proceeds will be credited to the bank account furnished by you at the time of purchasing these bonds.
  • You can prematurely encash SGBs at the end of the lock-in period of 5 years (from the date of issue), by placing a sell order on the exchange. You may also approach the concerned bank or post office at least one day before the coupon payment date and the proceeds will be credited to the bank account.
  • Say, for some reason, you need the money but do not wish to prematurely redeem your investment, you can avail of a loan against your SGBs. The loan-to-value (LTV) will be equal to a regular gold loan.
  • You can also gift SGBs to your near and dear ones, provided the person whom you intend to gift, fulfils the eligibility criteria.
  • It is possible that you benefit from capital appreciation of gold since SGBs are linked to the price of gold.

Tax Implications of Investing in Sovereign Gold Bonds

The interest earned on SGBs is taxable (under ‘Income from Other Sources') as per the provisions of the Income-tax Act, 1961 (43 of 1961) and will be taxed as per your income-tax slab. Tax Deduction at Source (TDS) does not apply to the interest earned.

Speaking about the capital gains, SGBs that are sold at maturity (i.e. at the end of the tenor of 8 years) are exempt from capital gain tax.

However, if SGBs are sold before maturity, that is, at the end of the lock-in period of 5 years, Long Term Capital Gain (LTCG) tax @ 20% (with indexation benefit) will be levied, plus the applicable surcharge and 4% cess.

Happy Investing!

Indian Bonds to Join JPMorgan Global Bond Index: What It Means for Investors

Oct 1, 2023

JPMorgan Chase, the New York-headquartered multinational financial services firm announced the addition of the Indian government bonds to its Global Bond Index- Emerging Markets index suite...Read on.

US 10 Year Bond Yield End 40-Year Bearish Cycle. Here's How it Could Impact Your Investments...

Jun 28, 2023

This metric is closely monitored by investors as it's a key benchmark to assess market sentiment.

Treasury Bonds: The New Investment Idea of 2022

Feb 15, 2022

2022 could be a good time to lock in an investment in government securities at a higher yield for the long term.

Gold is Falling Behind. Here's How to Play it this Festive Season...

Oct 18, 2021

This festive season, instead of buying physical gold, you could consider investing in gold 'the smart way'.

RBI Opens a New Market for Investors

Jul 15, 2021

You now have a new way to create wealth. Grab it with both hands.

How to Prepare for Your Trading Day in 8 Simple Steps

Dec 9, 2019

Boost your trading profits with the right preparation.

Government of India Saving Bonds: Should You Invest?

Jan 11, 2018

PersonalFN's critical analysis of Government of India Saving Bonds.

Should You Buy Gold This Akshaya Tritiya? Find Out Here...

Apr 27, 2017

PersonalFN explain if you should buy gold this Akshaya Tritiya muhurat.

11 Secrets to Steal from Mark Ford

Jul 20, 2016

Ritika Bajaj from Common Sense Living shares some of Mark Ford's secrets on building wealth.

Why most value investors hate gold?

Feb 22, 2012

Equitymaster tries to find out why most value investors hate gold.

What are Debt-oriented Mutual Funds: Meaning, Types, Benefits, and FAQs

Aug 6, 2023

Debt Mutual Funds are schemes that predominantly invest in fixed-income generating instruments such as corporate bonds, government bonds, certificates of deposits, treasury bills, etc.

Why Interest Rates Need to go up

May 6, 2022

Interest rates have started rising in India but there's a long way to go.

How to Inflation-Proof Your Portfolio. Here are 5 Things You Can Do...

Jan 17, 2022

Here are the 5 best asset classes to protect your portfolio and even take advantage of inflation.

Boom in 2022

Sep 16, 2021

Indian bonds inclusion in global bond indices can trigger a bull run in our markets. It will bring FII funds far bigger than divestment, asset monetisation, and GST.

JSW Energy's Green Bonds Puts Stock in Focus

May 11, 2021

Shares of JSW Energy jumps 3% in the intra-day trade today on account of issuance of green bonds.

Rejecting Tradition Created a Monster

Apr 26, 2018

Bill Bonner is of the view that American economy is weaker than people think. Meanwhile, he offers insights on his visit to the pride of Barcelona, the Sagrada Familia.

The Place Where All the Bubble Money Goes

Jul 1, 2017

Providing fake money to the asset markets did not make companies genuinely more profitable or bonds safer. But the money had to go somewhere...

Fed Hikes, Markets Yawn

Mar 17, 2017

The Fed can never voluntarily return to sound money and market-set interest rates.It presides over the biggest bubble in stocks and bonds the world has ever seen. Without underpriced credit, the whole thing would collapse.

How Low Interest Rates Have Hurt Economic Recovery

Jan 18, 2016

When central banks around the Western world cut interest rates to close to zero percent levels, it was expected that an economic recovery would soon follow. But that hasn't really happened.

ICICI Safety Bonds: A reality check

Aug 30, 2000

The ICICI Safety Bonds issue opened on August 28, 2000. The issue has been sub-divided into 3 schemes. Equitymaster takes a look at what is on offer.