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Published on: Sep 16, 2026

Sovereign Gold Bond - How to Buy Gold Bond?

The Sovereign Gold Bond (SGB) Scheme is a government-backed investment option offered by the Reserve Bank of India on behalf of the Government of India. Gold Bonds are denominated in grams and serve as an alternative to physical gold, representing a dematerialized form of gold backed by the government. This makes them a secure investment, eliminating the risks associated with holding physical gold.

Investing in gold bonds is wise for those looking to diversify their portfolio with gold without the hassle of dealing with physical gold storage and potential theft.

Gold Bonds vs Physical Gold

Sovereign Gold Bonds can be easily converted to cash without the extra charges typically associated with converting physical gold through a jeweller. These bonds are secure, as they eliminate the risks of theft and storage costs associated with physical gold. Additionaly, gold bonds do not require considerations of purity, which can be a concern with physical gold.

Interest Paid on Gold Bond

One significant advantage of holding gold bonds is the interest income they generate. Holders of Sovereign Gold Bonds receive a fixed annual interest rate of 2.50% on their initial investment amount, which is not possible with physical gold holdings.

Tax on Gold Bond

While Tax Deducted at Source (TDS) is not applicable to Sovereign Gold Bonds, capital gains tax treatment is similar to that of physical gold. However, long-term capital gains are exempt if the bonds are held until redemption. Moreover, indexation benefits are provided for long-term capital gains if the bonds are sold before maturity.

Who can Buy Gold Bond?

Gold Bonds are available for purchase by Indian residents, be it individuals, jointly by individuals, or on behalf of a minor child. Organizations such as Trusts, Charitable Institutions, and Universities can also invest in these bonds. Know Your Customer (KYC) norms apply, requiring documents like Voter ID, Aadhaar card, PAN, or Passport.

How to Buy Gold Bond?

Gold Bonds can be purchased from banks across India. Investors must make a minimum investment of one gram of gold. The maximum limit is 4 KG for individuals and HUFs, and 20 KG for trusts per fiscal year, with adjustments made each year by the government. This ceiling includes bonds subscribed under different tranches during initial issuance and those bought from the Secondary Market.

How to Sell Gold Bond?

The Sovereign Gold Bond has a tenor of 8 years, with an exit option available from the 5th year on interest payment dates. The selling price is set in Indian Rupees, based on the average closing price of gold of 999 purity over the three previous business days, as published by the India Bullion and Jewellers Association Limited. Furthermore, gold bonds are tradable on stock exchanges within a fortnight of issuance as per RBI notifications. Thus, bonds can be sold or transferred before maturity by executing a transfer instrument under the Government Securities Act.

Can I Pledge Gold Bond as Collateral?

Yes, gold bonds can be pledged as collateral for loans similar to physical gold. The loan-to-value (LTV) ratio corresponds to ordinary gold loans, as dictated by the Reserve Bank.

Sovereign Gold Bond Scheme 2019-20

The Government of India, in consultation with the Reserve Bank of India, has issued the Sovereign Gold Bonds from October 2019 to March 2020, in six tranches, as detailed in the official notification. You can view the specifics of eligibility and other related information in the press release linked below.

Further Resources

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Frequently Asked Questions

Common questions about Sovereign Gold Bond Purchase and Benefits India.

A Sovereign Gold Bond is a form of investment offered by the Reserve Bank of India on behalf of the Government of India. It is denominated in grams of gold and can be purchased as an alternative to physical gold. It is essentially a dematerialized or paper form of gold, backed by the Government of India.
Sovereign Gold Bonds offer several advantages over physical gold, including ease of redemption, no risk of theft or damage, no storage costs, and payment of periodic interest at 2.50% per annum on the initial investment amount. Physical gold does not earn any interest.
Sovereign Gold Bonds can be purchased by individuals residing in India, either singly or jointly, or on behalf of a minor child. Trusts, charitable institutions, and universities are also eligible to invest in these bonds. KYC norms are applicable for the purchase.
The minimum investment in Sovereign Gold Bonds is one gram of gold. The maximum limit is 4 kg for individuals and HUFs, and 20 kg for trusts and similar entities per fiscal year (April-March).
Yes, Sovereign Gold Bonds can be traded on stock exchanges within a fortnight of issuance on a notified date by the RBI. Additionally, they can be sold or transferred before maturity by executing an Instrument of transfer as per the Government Securities Act.
Yes, like physical gold, Sovereign Gold Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is set equal to the ordinary gold loan mandated by the Reserve Bank of India from time to time.
The tenor or maturity period of Sovereign Gold Bonds is 8 years. However, investors have an exit option from the 5th year onwards, which can be exercised on the interest payment dates.
The redemption price of Sovereign Gold Bonds is based on the simple average of the closing price of gold of 999 purity for the previous 3 business days from the date of repayment, as published by the India Bullion and Jewelers Association Limited.
Sovereign Gold Bonds are exempted from capital gains tax if held till redemption. If sold before redemption, indexation benefits will be provided for long-term capital gains arising from the transfer.
The Government of India, in consultation with the RBI, has decided to issue Sovereign Gold Bonds in six tranches from October 2019 to March 2020.