Last Updated on April 23, 2026 by teamtfl
“Gold is money. Everything else is credit.” – J.P. Morgan
For nearly a decade after their launch in 2015, Sovereign Gold Bonds were arguably the best way to own gold in India. You got the full price appreciation of gold, a guaranteed 2.5% annual interest on top, zero storage risk, and tax-free returns if held to maturity.
In February 2024, the government stopped issuing new SGBs without announcement or explanation. No new tranches have been issued since. This changes the calculus significantly for anyone researching SGBs today.
⚡ Quick Answer
Sovereign Gold Bonds (SGBs) were launched by the Government of India in November 2015, issued through RBI. They offered gold price appreciation plus 2.5% p.a. interest, with complete tax exemption on maturity gains. New issuances were discontinued from February 2024. Existing SGBs can still be bought in the secondary market (NSE/BSE) – often at a discount to the current gold price. For new investors wanting gold exposure, gold ETFs or gold mutual funds are now the primary alternatives. Gold should form 8-10% of a long-term portfolio at most.
What Were Sovereign Gold Bonds?
The Government of India launched SGBs in November 2015 with a specific purpose: to reduce India’s voracious appetite for physical gold imports, which were creating a significant current account deficit. The idea was to channel Indian households’ gold savings into a financial instrument that tracked gold prices but did not require physical import and storage.
The structure was elegant. You deposited money equal to the current gold price (denominated in grams). You earned 2.5% annual interest on that investment, paid semi-annually. At maturity (8 years), you received back the current gold price in cash – and critically, the capital gains on this maturity redemption were completely exempt from tax.
For investors who held to maturity, SGBs delivered gold returns + 2.5% interest + zero capital gains tax. For long-term gold investors, this was significantly better than physical gold (no storage cost, no making charges) and better than gold ETFs (which have expense ratios and attract capital gains tax on gains).
The Discontinuation in 2024
In February 2024, the government quietly stopped announcing new SGB tranches. No formal announcement was made. The most widely discussed reason is fiscal: at current gold prices (which have roughly doubled since many early tranches were issued), the government faces very large redemption obligations at maturity. The scheme that made sense at Rs 2,500-3,000/gram becomes expensive at Rs 9,000+/gram.
As of April 2026, no new tranches have been announced and there is no official indication of when or whether new issuances will resume.
Gold is not a return-seeking asset. It is a portfolio insurance asset.
RetireWise builds portfolio allocations where gold plays its correct role – a 8-10% hedge against equity downturns and currency risk, not a primary wealth-building position.
Buying SGBs in the Secondary Market
Existing SGB series (Series I through Series XIV and beyond) are listed on NSE and BSE and can be bought like any other bond. This is still a viable option for investors who want SGB exposure – and sometimes these trade at a discount to the current gold price, which means you can effectively buy gold cheaper than spot price.
The mechanics are the same: you still receive 2.5% annual interest, and if you hold to the original maturity date, the capital gains tax exemption still applies. The key difference is liquidity – secondary market trading volumes are thin, so buying and selling large quantities can affect price.
For investors considering secondary market SGBs, check the remaining maturity period. An SGB with 1-2 years to maturity is a short-term gold instrument. One with 5+ years remaining behaves more like the original long-term investment.
The Tax Update: Budget 2024 Changed the Rules
Budget 2024 made a significant change to capital gains taxation that affects SGBs sold before maturity in the secondary market. The indexation benefit on LTCG (previously available if held more than 36 months) was removed. Now all capital gains from secondary market SGB sales are taxed at a flat 12.5% without indexation if held more than 24 months.
The tax exemption on gains at maturity (holding to the full 8-year tenure) remains unchanged – that benefit is still intact.
Alternatives to SGBs for New Gold Investment
Since new SGB issuances are not available, investors wanting gold exposure have two main options.
Gold ETFs (Nifty Gold ETF, SBI Gold ETF, HDFC Gold ETF, etc.) track gold prices directly and are traded on the exchange like stocks. Expense ratios are low (0.4-0.8% p.a.). They do not earn the 2.5% interest that SGBs provided. Capital gains are taxed – STCG at slab rate if held under 24 months, LTCG at 12.5% without indexation if held longer (post Budget 2024).
Gold Mutual Funds (Fund of Funds that invest in gold ETFs) are convenient for SIP-based investors since they can be bought in fractional amounts without a Demat account. Slightly higher expense ratio than direct ETFs. Same tax treatment as gold ETFs.
Physical gold – coins and bars from reliable sources – remains an option but comes with making charges (on jewellery), storage costs, safety risk, and capital gains tax on sale.
How Much Gold Should You Own?
Gold is a portfolio diversifier, not a return engine. Over long periods, gold has delivered roughly inflation-adjusted returns in India – reasonable, but significantly below equity over any 15+ year horizon.
Where gold earns its place is in crisis periods. During the March 2020 COVID crash, gold prices rose while equity fell. During the 2008 global financial crisis, gold was one of the few assets that held value. This negative correlation with equity in crisis makes a 8-10% gold allocation valuable as portfolio insurance.
Beyond 10%, gold starts to drag portfolio returns over long periods without proportionate risk reduction. For retirement portfolios with a 20-25 year horizon, the equity component needs to dominate for the corpus to keep pace with inflation and lifestyle costs.
Read: Gold Monetization Scheme: Another Way to Earn From Idle Gold
SGBs were excellent while they lasted – and existing holders should absolutely hold to maturity for the tax-free gains. For new gold investment, gold ETFs are the practical alternative. Keep gold at 8-10% of your portfolio. Not more.
Gold protects wealth. Equity builds it.
What percentage of your portfolio is currently in gold – and is it the right amount?
RetireWise reviews your complete asset allocation including gold, equity, debt, and real estate – and tells you whether each component is sized correctly for your goals.
Your Turn
Do you hold SGBs from an earlier tranche – and are you planning to hold to maturity or sell in the secondary market? What is your current gold allocation as a percentage of your total portfolio? Share in the comments.
What if I invest today and at maturity gold price is less than buying price? I’ll be forced to sell at a loss then.