Sovereign Gold Bond (SGB) Scheme: Features, Tax and Why New Issues Stopped
Last updated: 2026-11-13 · MockMentor
Sovereign Gold Bonds (SGBs) are Government securities denominated in grams of gold, issued by the RBI on behalf of the Government from November 2015. Investors get the gold price at maturity plus 2.5% interest a year. The Government confirmed in Budget 2025 that no new tranches will be issued, because rising gold prices made repayment costly.
In one line: paper gold with sovereign backing, a fixed coupon and tax-free gains if held to maturity, now no longer issued.
At a glance
| Item | Details |
|---|---|
| Launched | November 2015 |
| Issuer | RBI on behalf of the Government of India |
| Status | No new tranches (Budget 2025) |
| Tenure | 8 years, exit allowed from the 5th year on interest dates |
| Interest | 2.5% a year, paid half-yearly |
| Limits | 1 gram minimum; 4 kg a year for individuals and HUFs, 20 kg for trusts |
| Investors | Residents only |
Key features
- Price based on the average closing price of 999 gold published by the India Bullion and Jewellers Association (IBJA); ₹50 a gram discount for online buyers.
- Tradable on stock exchanges; counted as Government securities and eligible for banks' SLR.
- Usable as collateral for loans.
Tax
- Interest is taxable at slab rates, with no TDS.
- Capital gains are fully exempt only if held to maturity by the original subscriber.
- Early redemption after five years is taxed as long-term capital gains at 12.5%.
Possible exam questions
- Why did the Government stop issuing Sovereign Gold Bonds? What does this say about managing contingent liabilities?
- Compare SGBs, the Gold Monetisation Scheme and physical gold as investments.
Complete notes in our courses: this page gives the essentials. The Super-Elite and Elite courses carry the full chapter with every update merged in, plus practice MCQs. Compare the courses.
More in Finance Ministry schemes
- National Pension System (NPS)
- Unified Pension Scheme (UPS)
- Atal Pension Yojana (APY)
- PM Vaya Vandana Yojana (PMVVY)
- PM Jeevan Jyoti Bima Yojana (PMJJBY)
Prepare with MockMentor
RBI Grade A/B 2027 Super-Elite Course (₹7,500) – Complete Phase 1 and Phase 2 preparation with the Descriptive Writing Programme. 365 days validity.