The Reserve Bank of India has released the calendar for the Sovereign Gold Bond Scheme, 2021-2022 for the second half of FY2021-2022. The Bonds will be available for subscription in 4 tranches from October 2021 to March 2022.

This is a departure from RBI’s earlier stance of one bond issue each month. Over the next 6 months, there will be only 4 issues of Sovereign gold bonds.
For the tranche that is now open for subscription (October 25- October 29, 2021), the subscription price is Rs 4,765 per gram. For an online subscription, there is a discount of Rs 50 per gram.
For details about previous Sovereign Gold bond tranches and their subscription prices, please refer to the following link on the RBI website (refer to annexure 1).
Should you invest?
How Sovereign Gold Bond (SGB) Scheme works?
This is best understood with the help of an example.
- You purchase 50 units of Sovereign gold bonds (or 50 SGBs). Each SGB unit is equivalent to 1 gm of gold.
- You get interest on the total purchase amount.
- At the time of maturity/redemption, you get the prevailing price of 50 grams of gold.
For instance, if you bought 50 units at Rs 4,000 per gram (total investment of Rs 2 lacs) and the prevailing price at the time of redemption is Rs 6,000 per gram, you will get back Rs 3 lacs. Alternatively, if the price prevailing at the time of redemption is Rs 3,000 per gram, you will get back Rs 1.5 lacs.
In addition, you earn an interest income of 2.5% per annum. Interest will be calculated on your investment value (and not on the prevailing price of gold). In this case, you will get Rs 2,500 every six months until bond maturity.
Important Features of Sovereign Gold Bond Scheme (2020-2021)
- The Minimum Subscription is 1 Bond (1 gm of Gold)
- The Maximum investment limit is 4 KG of gold (4,000 SGBs) per financial year.
- Only Resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
- Non-resident Indians (NRIs) can’t invest in Sovereign Gold Bonds.
- Interest income of 2.5% p.a. The interest is paid out on a semi-annual basis.
- The subscription price is the simple average closing price of gold of 999 purity, published by IBJA for the last three working days (preceding the week of issuance).
- Your investment will be redeemed at the prevailing price of gold. You will not get back physical gold.
- The price for redemption/maturity shall be calculated in the same manner.
- Sovereign Gold Bonds are backed by Government guarantee. Hence, there is no credit risk.
- However, there is price risk. The value of your investment will change with the price of gold.
- The bonds will be listed on BSE and NSE. Hence, you can exit before maturity in the secondary market too.
- You can take loans against these gold bonds (just like physical gold and jewellery)
- You can apply for the SGBs from your brokerage account.
How to buy Sovereign Gold Bonds (SGBs)?
There are 2 ways.
- Primary Market (directly from RBI): RBI comes out with new issues on a regular basis (almost on a monthly basis). You can apply through your bank, your broker, or websites such as StockHolding Corporation of India.
- Secondary Market: Gold bonds are listed on stock exchanges. If you have a demat and trading account, you can purchase from the secondary market too. For more on nuances and misconceptions of buying/selling gold bonds in the secondary market, please refer to this post.
How can I exit or redeem my Sovereign Gold Bond investments?
Sovereign Gold Bonds mature in 8 years. There is also an option to redeem gold bonds with the Reserve Bank after 5 years on interest payment dates. Note that interest payment is semi-annual.
Thus, you can redeem your investment (if you wish) with the Reserve Bank after 5 years at every 6 months interval (5 years, 5.5 years, 6 years, 6.5 years, 7 years, 7.5 years and 8 years from the date of issuance).
At the time of maturity, you will get back the value of your investment as per the prevailing price of gold. Thus, you carry the price risk.
Let’s say you bought 10 units (10 grams) of SGB at Rs 4,500 per gram. At the time of redemption, the gold price is Rs 6,000 per gram. You will get back Rs 60,000 (10 X 6,000).
On the other hand, if the price at the time of redemption/maturity is Rs 3,500 per gram, you will get back Rs 35,000 (10X 3,500).
How are Sovereign Gold Bonds taxed?
The interest income on Sovereign Gold Bonds are taxed at your slab rate.
The treatment of capital gains on Sovereign Gold Bonds is the same as for the physical gold.
If you sell Sovereign Gold bonds in the secondary markets before completion of 3 years (holding period), the resulting gains will be short term capital gains and taxed at your marginal tax rate.
If you sell Sovereign Gold bonds in the secondary markets after completion of 3 years (holding period), the resulting gains will be long term capital gains and taxed at 20% after indexation.
What about redemption?
Here, you have an interesting twist.
There is no capital gains tax on redemption (or maturity). Note this relief is only for individual investors (Section 47 of Income Tax Act).
Therefore, you may buy SBG at Rs 4,500 per gram and redeem with RBI after 8 years at Rs 6,500 per gram. You will NOT have to pay any capital gains tax. Remember, you can redeem SGB after 5 years on 6-month intervals too. There shall be no tax on such redemptions too.
This is to bring taxation of SGB in line with physical gold. In fact, makes it even better for SGBs. In case of physical gold, you can continue to hold as long as you want and thus not pay capital gains tax. However, sovereign gold bonds mature in 8 years. Taxing capital gains on redemption would have been a disincentive. Hence, this provision has been added.
When the SGB matures (or you redeem), you can use the proceeds to purchase another gold bond or physical gold/jewellery or use it for any purchase.
What are the pros and cons of investing in Sovereign Gold Bonds?
Before we get down to the pros and cons, let’s first look at other ways of investing in gold invest in gold and the associated issues. And how SGBs fare against them.
- Physical gold (Storage can be a problem but manageable. Purity)
- Gold Jewellery (Bad choice as an investment since you incur making charges)
- Gold Mutual Funds (Expense ratio. Wide variance in performance of gold mutual funds)
- Gold ETFs (Expense ratio, low liquidity, impact cost, Price and NAV difference)
None of the above forms of gold pays you interest income. Only Sovereign Gold Bonds do.

Unlike Gold mutual funds and gold ETFs, you do not have to incur any expenses. I checked the expense ratio was close to 1% for some funds and ETFs.
There is an additional benefit with Sovereign gold bonds. As I understand, all the above forms of gold will include the impact of 3% GST on buying gold. Remember, even gold mutual funds and ETFs must buy the underlying gold. With Sovereign Gold Bonds, since there is no underlying gold (we believe in Government’s promise to match the Gold price), there is no GST impact.
That’s for the good part.
Sovereign Gold Bonds are not without a problem. You may face issues if you must sell in the secondary market.
Liquidity is a problem in the secondary market. This may mean higher impact cost (difference between bid and ask spread). In the worst case, you may just not be able to sell or may have to sell at a heavy discount.
There are many reasons for lower liquidity in the secondary market. First, there are many SGB issues that are traded on the market. Therefore, the demand gets spread across many investments. Secondly, the RBI issues SGBs almost on a monthly basis. Hence, potential buyers can directly subscribe to the new issue than buy on the exchange (unless they can buy something on the exchange at high discount).
Earlier, there was an issue with inter-depository transfers (between CDSL and NSDL) too. Thus, most brokerage firms didn’t allow you to buy in the secondary market (though they are allowed to sell). As I understand, this is no longer a problem.
Whatever the reason be, the liquidity is low in most issues. Some issues hardly even trade. You can find information about the trading volumes on NSE website. As a seller, this information may not be as useful. You can sell only what you hold. However, as a potential buyer, you must consider this aspect. At the same time, keep an eye on actual gold price levels before you go and place a buy bid. Also, note that the SGBs have an interest component too. The difference is not just in interest rate (earlier the interest rate offered was 2.75% p.a. The interest you earn depends on the subscription price. Factor in these aspects while placing your bid. I have discussed such aspects in detail in the following post:
When should you use Sovereign Gold Bonds?
If you are investing for a goal many years away, say daughter’s marriage, SGBs are perfect. You can simply buy and hold. You can reinvest in a fresh issue when the bond matures. When closer to the goal, you can simply use the proceeds to purchase gold/jewellery.
If you are investing in Sovereign Gold Bonds for diversification, low liquidity can pose challenges. For instance, if you must rebalance portfolios and have to buy/sell bonds in the secondary market, it can a problem (Gold ETFs or gold mutual funds score here). However, in my opinion, this shouldn’t be a problem for most portfolios (especially when you are in the accumulation phase). I assume you can’t forecast gold prices with accuracy. Adding gold bonds to the portfolios is not a problem since RBI comes with fresh issues almost on a monthly basis. Reducing will also not be a problem if you have been adding gold bonds gradually since you can redeem with RBI after 5 years at 6-month intervals. I will suggest SGBs for portfolio diversification too.
If you are investing in gold to benefit from short term movements, Gold ETFs or gold mutual funds are better compared to SGBs. Nippon India ETF Gold BeES can be a good option (since there is decent liquidity and ETFs don’t have exit load either).
Is the price for Gold too high?
I don’t know if the current gold price is too low or too high. And this will always be a concern.
Personally, I believe gold should do well in times when the central banks around the world are printing money. There is momentum too. However, you can discount my opinion on gold price levels. Such first-order thinking usually does not work with investments.
As an investor, the price should not be too big a concern Assuming you must take incremental exposure to gold for portfolio diversification or any other reason, you can simply stagger your investments just like you do for equity investments. You can expect RBI to come out with such issues for a foreseeable future.
Additional Links
Government Notification on Sovereign Gold Bonds Scheme 2021-22
RBI Press Release on Sovereign Gold Bonds 2021-2022
RBI Website: All the notifications and circulars about Sovereign gold bonds
61 thoughts on “Sovereign Gold Bonds 2021-2022: Should you invest?”
This is an amazing article which comprehensively describes the subject
Thanks Salil!!!
Good article. Suppose if we forget the date of maturity (after 8 years) and then go after 2-3 months for redemption, do they consider date of redemption or old date of maturity only to calculate the returns.
Hi Ravi,
The money should be auto-credited to your account. Hence, such a situation will not arise.
Fantastic Article! I always read your articles.
Thanks Bhowmiks!!! Keep coming back.
Can indian citizens living in Nepal or Bhutan invest in SGB?
Thanks Bhowmiks!!! Keep coming back.
Very comprehensive write up given by Deepesh. Thanks. I have subscribed to newsletters also.
Regards,
Sriram Iyer.
Thanks Sriram for the feedback and signing up for the newsletter.
If possible, please share with your friends and family too. They might also like it.
Hi,Deepesh,
Great article !, This is a clear & crisp explanation for SGBs
May you can also mention there are already SGBs trading below this price in the market(like SGBFEB27 @4350 per gram)
So we can buy at ~6% discount to current offering(provided seller are available)
Wjhat is your opinion about this ?
Hi Manish,
Yes, very much. You can buy from the secondary market if you are getting a better price. Will be awesome.
Don’t just look at the last traded price. Look at the best Ask price. You already know that. 🙂
If someone will buy from secondary market then they will get the 2.5%p.a interest ?
Yes, you will get interest even if you buy in the secondary market.
Hello Deepesh,
Do you know what are tax implications if I buy SGB on exchange after listing and then redeem at maturity. Will capital gain still be tax-free?
Can’t find anything in this regard on google!! Hoping for you expert knowledge will shed some light.
Hi Rajnish,
Even if you buy in secondary market, capital gains on maturity are exempt from tax.
The rationale is that the Govt. wants to keep the taxation similar to holding physical gold, that you may hold for eternity.
For this reason, the maturity amount is exempt from tax.
1. What will happen, if at the time of maturity ie. after 5 year or 8 year, if current prevailing price at that time is not at per my expectation and I don’t want to sell my sgb units. Can I continue without any further procedure or I will be forced to redeem as per gold price at the time
2. What will be the procedure for redemption of of SI units at the time of maturity?
My both questions may be treated as I don’t have demat account and sgb will be brought in online banking procedure.
After 5 years, you have an option to continue.
After 8 years, the money will be credited to your account. You can reinvest the money in gold.
None of the SGBs has matured yet. Expect the amount to be credited directly to your bank account. You won’t have to do anything.
This has nothing to do with your mode of holding.
Very informative article really ur article cleared many confusions but having doubts in redemption procedure.
Thanks Karuna!!!
I think if SGB are redeemed between 5 and 8 years I.e., before maturity date, LTCG shall be leviable. The Author has written contrary to it.
Thanks Nirmal for the feedback.
Here is the excerpt from Section 47 (Transactions not regarded as transfer) of the Income Tax Act.
(viic) any transfer of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an assessee being an individual;
Hence, in my opinion, the redemption with RBI shall not result in capital gains.
Hi Deepesh,
Thanks for such conspicuous article. But, I have a question over current GOLD pricing.
I was checking the curve of last 10 years and GOLD pricing was almost stable (with constant growth). It suddenly increased in past 6~7 months despite global down due to COVID19.
Is it right time to buy SGB? As gold prices might be stable again for next 5~8 years and ROI might be less.
Thanks
Would suggest look at gold from the perspective of asset allocation and diversification.
If let’s say you decide to own 10% of your portfolio in gold, then add gold gradually.
Don’t get fixated too much on the prices.
Even for diversification, is it right time to buy sgb? Since I guess after 8 years of market correction sgb won’t give higher return than a normal saving account….. Enlighten me if I am wrong….
Hi Rajneesh,
These calls are almost impossible.
I usually work with asset allocation ranges.
Let’s say the allocation range for gold is 5-10%. If you are uncomfortable with gold prices, stick to the lower end of the range.
Not comfortable with binary allocations (0% of 10%).
Btw, note that you will get 20% (2.5% per annum for 8 years) over the next 8 years. That brings in some cushion.
Nice writeup.
Thanks Arun!
if I purchase bonds from market and redeem them on their maturity to govt, will I get capital gains tax exemption?
Yes.
Please refer to this post.
https://www.personalfinanceplan.in/buy-sovereign-gold-bonds-stock-exchanges/
Nice article indeed. Very lucid writing too. Appreciate the author.
One thing – as some other reader has pointed out, I feel there is some taxation difference between 8 year maturity and pre – 8 year (from 5 year period) redeem done by investor. Not sure if its wrt LTCG or wealth tax. Kindly examine please.
Thanks Jeyaram.
I copy an excerpt from Section 47 (Transaction not regarded as transfer) of the Income Tax Act.
any transfer of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an assessee being an individual;
The tax law doesn’t differentiate between interim redemption and redemption at maturity.
OK. Thanks. Looks like we can go ahead and invest if its for a purpose like daughters marriage., not as an investment asset class
Thank you for the very nice article, Deepesh.
Regards,
Arun
Hi Deepesh
My Name is also Dipesh.
As I have purchased sgb online at 50 Rs discount on 4th september 2020 at 5067 per gram I want to know that on which amount will get Interest on 5067 or 5117
Hi Dipesh,
You will earn interest on 5117.
Thanks a lot Deepesh !
Hats off to you for your wonderful suggestions not only to me but giving it to everyone.
You are welcome!
Nice article Mr.Deepesh !!
It have made things very clear about SGB.
I have one question… what if the bond holder had an unfortunate death before the maturity, whom shall the maturity amount be paid??
When shall it be paid?
Do we have any baneficiary to be added during purchase of bond?
Can you put some light on this…
Thanks in advance.
Hi Basavraj,
Yes, you can add nominee.
Please refer to point 16 in the Gazette notification. (https://rbidocs.rbi.org.in/rdocs/content/pdfs/SGB09102020_1.pdf)
In the event of death, the nominee can get the bond transferred in his name.
The payment from the bond will go as per schedule.
Here is the format of the form on RBI website.
https://rbidocs.rbi.org.in/rdocs/Forms/PDFs/GB301015F_FLB53F2017678C42B3BE83D6BFA7472980.PDF
I purchased the SGB today say price is 4k, after 8 years at maturity price of gold is 3k, so this means I am in loss.
So can I wait after 8 years and sell the SGB when market price comes up? May be after an year or 2, pls suggest?
Hi Rohit,
Yes, loss is a possibility in gold bonds. In your example, you would have earned interest over the years. That will be some relief.
The bond will mature in 8 years. So, can’t extend.
However, you can always reinvest the maturity amount into another issue of gold bonds or even physical bond (and continue your gold exposure).
After I buy SGB in secondary market, how does it transfer to my name and how to ensure that redemption proceeds are auto credited to my bank account on maturity ?? Any forms to fill ??
You don’t have to do anything.
The bonds will automatically come to your demat account. Interest income will be directly credited to your linked bank account.
If I buy SGB from Secondary Market (NSE,BSE) it will be Credited to Demat Account and hence it will be linked to bank account which is there with Demat.
But my query is, Will I get soft copy of Bond Certificate while purchasing it from secondary market? (AS I am getting receipt and certificate from RBI in email while purchasing it from new issues.)
Credited to bank account.
No certificate for buying from secondary market. The bonds will be in your demat account.
What is the Taxation on the SGB interest 2.5% ?
Taxed at your slab rate (income tax bracket)
I am just planning to start my investment. Is it advisable to invest in SGB considering there are no further allocations in my investment ?
After 5 year if i want to redeem do i need to sell in secondary mkt rate or what is the procedure?
You can redeem only with RBI. In the secondary market, you can sell.
Btw, 5 years is from the issuance of the bond and not from the date of secondary market purchase.
I do not have much clarity about how premature redemption happens.
Copying excerpt from RBI SGB Prodedural guidelines.
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11865&Mode=0
Premature redemption of the bonds is permitted after five year from the date of issue of such bond, on the date on which the next interest is payable. The request for pre-mature redemption shall be submitted to the RO or Depository through DP (in case of dematerialized securities) at least 10 days before the next interest payment date. If the RO/Depository Participant/Depository so desires it can call for additional documents, KYC proof, declaration etc. The request shall be scrutinized to verify the correctness of the particulars and may be submitted to RBI through the E-Kuber Portal at least four days before the due date of interest. On maturity and in case of premature redemption, the 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 week (Monday to Friday) for SGBs issued under tranche 1 to 9 and previous three working days for tranches issued thereafter at the rate published by the India Bullion and Jewellers Association Limited. The redemption proceeds shall be credited to the bank account of the customer.
Hey. Brilliant write up.
Just a few queries,
1.If we’re redeeming after the 5th year, there is no capital gains on the same right, so if I’m an investor wishing for liquidity I can redeem at the end of 5th year instead of 8th year with no differences in tax implications right? 2.Also if we redeem early say I’m applying for redemption on June 1 (30 days before coupon) and my interest payment date is June 30, I’ll get my money back by June 30 right (on the coupon payment dates)? Also will I be eligible for the interest for the period Jan-June of the year of early redemption
Hello Mr. Deepesh,
Well articulated! I had below question?
Is there any charges (Service, GST, etc..) applied by banks(Primary) or DPs(Secondary) while purchasing the SGB?
HI
I heard 2.5% is not available for people buying via demat format on exchanges, is that true?
Hey, I have read the World Bank gold rate forcast report, it says that the price of the gold would be around 1,400 usd/oz in 2030. The current rate is around 1,750 usd/oz, it means that gold will be down by 20% in next 8-10 year.
Not sure if any other reputed organization also think in line with World Bank forecast price.
If the expected price ia going to be such then ideally one should be away from gold investment.
Just wanted to have yours opinion on this forecasted price.
I purchased SGB via SBI Online banking , series I of 2021-22.
I filled my DP Client id details also (which were optional).
I received only one email from “ekuber” helpdesk regarding payment confirmation.
But neither the SGB holding certificate is received nor the SGB’s are credited in my demat yet.
Please help and reply.
Hi Anshul,
Have the bonds been credited now? Or still pending?
Very good article!
I had one query:
If I buy SGB from secondary market today which was issued 5 years before, would I be eligible for tax free premature redemption?
My SGB Aug 2016 series is now due to early redemption on Aug 5, 2021. However, when I approached my bank (Indusind) they are redirecting me to EKuber Helpdesk. The latter, in turn, asked me to approach my bank.
Seems both are unaware of the process for early redemption and just passing the buck.
Sir
I had brought SGB from SBI in Chandigarh ,as per direction of RBI 50₹ was there on every one gram u buy. Is this not applicable when u buy it from the bank physically. As per the Bank staff it’s only applicable in online transaction. Pl guide.
Good evening Sir
Probably the most comprehensive explanation if have found so far and really appreciate your hard work for enlightening the layman like us about SGB. I want to request you to kindly suggest if the present series 9 @ Rs 4786 can be purchased or not or should I buy from secondary market and which series and at what price. Please help me in this regard as I am very new and want to invest in gold for future.
Regards