Last Updated on April 23, 2026 by Hemant Beniwal
In 2016, when I first wrote about Sovereign Gold Bonds, my inbox filled with the same question from readers: “Should I buy?”
In 2026, the same question arrives – but with a twist. The government discontinued fresh SGB issuances in the FY 2024-25 Union Budget. No new tranches have been announced since. The secondary market on stock exchanges still exists, but the primary subscription window that allowed buying at the RBI issue price – often with a Rs. 50 discount for online subscribers – is gone for now.
This changes the calculus for new investors significantly. The SGB as a product remains one of the best ways to hold gold in India. How you can access it has changed.
Quick Answer (2026 Update)
Sovereign Gold Bonds (SGBs) are government securities that track gold prices and pay 2.5% annual interest on the initial investment, with capital gains tax exemption on maturity (held to full 8-year term). Fresh SGB issuances have been discontinued as of FY 2024-25. Existing SGBs can be bought on the secondary market (BSE/NSE) at prevailing market prices. For new investors, Sovereign Gold Bond ETFs or Gold ETFs are the practical alternatives. SGBs remain superior to physical gold and gold ETFs for long-term investors who can access them at a reasonable premium.
Table of Contents
- What Is a Sovereign Gold Bond?
- The 2024 Change: Fresh Issuances Discontinued
- Key Features of SGBs
- SGB vs Physical Gold vs Gold ETF vs Gold MF
- Buying SGBs on the Secondary Market in 2026
- Tax Treatment: Where SGBs Win Clearly
- How Much Gold Should Be in a Retirement Portfolio?
- Frequently Asked Questions
What Is a Sovereign Gold Bond?
A Sovereign Gold Bond is a government security denominated in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India. You are not buying physical gold. You are buying a bond whose value is linked to gold prices and which carries the full sovereign guarantee of the Indian government.
When you invest in an SGB, you receive 2.5% interest annually (paid semi-annually) on the original investment amount in rupee terms, and at maturity after 8 years, you receive the current gold price in rupees for the number of grams you invested. If gold has appreciated, you benefit from that appreciation. If it has fallen, you still received 2.5% interest throughout. Importantly, the capital gain at maturity is fully exempt from capital gains tax – which is the most significant tax advantage SGBs offer over any other gold investment format.
“Gold in a retirement portfolio is not a growth investment. It is insurance – against inflation, currency depreciation, and systemic financial stress. The question is not whether to own gold. It is which format provides the best combination of returns, tax efficiency, and access.”
The 2024 Change: Fresh Issuances Discontinued
In the Union Budget 2024-25, the government quietly discontinued fresh SGB issuances. No new tranches have been offered since FY 2023-24. The stated reason was the high interest cost – the government was paying 2.5% annual interest on gold-linked securities while gold prices rose sharply, making SGBs expensive relative to the fiscal benefit.
This is a significant change for investors who had relied on fresh primary issuances, which allowed buying at the RBI issue price (typically close to current gold price, with a Rs. 50 discount for online applications). That window is currently closed.
What remains: all previously issued SGBs continue to trade on the secondary market. Investors can buy and sell these on BSE and NSE like any listed security, at market prices determined by supply, demand, and the prevailing gold price. The secondary market is liquid for most SGB series.
Whether fresh issuances will resume is unknown. The government has not committed to restarting them. For now, investors interested in SGBs must work through the secondary market or use alternative gold instruments.
Key Features of SGBs
Tenor: 8 years, with early exit option from the 5th, 6th, and 7th year anniversary dates (on the next interest payment date). Early exit in years 1 to 4 is only possible by selling on the secondary market.
Interest rate: 2.5% per annum on the initial investment value, paid semi-annually. Note: this is the current rate on existing bonds. The 2016-era bonds had 2.75% – the rate was revised downward.
Denomination: Minimum 1 gram of gold, maximum 4 kg per individual per financial year (500 g for trusts and similar entities).
Form: Demat or paper certificate. Demat is strongly recommended for ease of trading and nomination.
Loan collateral: SGBs can be used as collateral for loans from banks, making them more liquid than physical gold for emergency purposes.
Capital gains at maturity: Fully exempt if held to the full 8-year term. This is the biggest advantage over Gold ETFs and physical gold.
SGB vs Physical Gold vs Gold ETF vs Gold MF
| Feature | SGB | Physical Gold | Gold ETF |
|---|---|---|---|
| Interest/yield | 2.5% p.a. | Nil | Nil |
| Storage cost/risk | None | High | None |
| Maturity capital gains tax | Nil (held to maturity) | 12.5% LTCG (24+ months) | 12.5% LTCG (24+ months) |
| Liquidity | Secondary market (limited) | High (can sell anywhere) | Very high (exchange) |
| Making charges/premium | None (primary); premium on secondary | 5-25% making charges | 0.5-1% expense ratio |
| Purity guarantee | Sovereign guarantee | Variable | SEBI-regulated |
For a long-term investor who can commit to the 8-year term, SGBs on the secondary market at a small premium are still usually better than Gold ETFs due to the 2.5% interest advantage and capital gains tax exemption at maturity. If liquidity is important or the secondary market premium is too high, Gold ETFs are the cleaner alternative.
Buying SGBs on the Secondary Market in 2026
With fresh issuances discontinued, the secondary market is the only access point for new SGB investors. A few practical points.
SGBs trade on BSE and NSE like shares. You need a demat account and trading account to buy them. They are listed under their series name (e.g., SGBMAR29 for a bond maturing in March 2029).
Secondary market prices typically trade at a small premium to the current gold price, because buyers are also acquiring the remaining interest income for the holding period. This premium needs to be factored into the effective cost. If the premium is more than the present value of remaining interest income, you are overpaying relative to simply buying a Gold ETF.
Check the maturity date carefully. An SGB with 2 years to maturity does not give you the same tax-free maturity benefit as one with 6 years left. For the capital gains exemption to apply, you must hold to the original maturity date – intermediate sales on the secondary market attract capital gains tax as normal.
Tax Treatment: Where SGBs Win Clearly
The most compelling argument for SGBs over other gold formats is tax efficiency for long-term holders.
Capital gains at maturity (held full 8-year term): fully exempt. No LTCG tax regardless of the appreciation.
Interest income: taxable as income at your slab rate. This is the only tax cost of holding an SGB to maturity.
Early redemption via secondary market: capital gains taxed as LTCG at 12.5% if held more than 24 months, or STCG at slab rate if held less than 24 months. Same as Gold ETF.
For a 30% tax bracket investor holding gold for 8 years: SGB saves 12.5% capital gains tax on the entire appreciation. On an investment that doubles (which gold has historically done over 8-year periods), that is a significant absolute saving.
How Much Gold Should Be in a Retirement Portfolio?
Gold in a retirement portfolio serves as a hedge, not a growth engine. It has low correlation with equity markets and performs well during periods of currency stress, inflationary spikes, and financial system uncertainty. It underperforms equity over long periods in most market cycles.
A reasonable allocation for most retirement portfolios in India: 5 to 10% of total portfolio value. Below 5% and gold has no meaningful impact on portfolio stability. Above 15% and you are making a speculative bet on gold outperforming equity, which is historically not justified over 15 to 20 year horizons.
For the gold allocation, SGBs (via secondary market) or Gold ETFs are both appropriate. Physical gold jewellery is not an investment – the making charges, purity variations, and high buy-sell spread make it a poor financial instrument regardless of sentimental value.
Gold in Your Retirement Plan
RetireWise builds retirement portfolios with appropriate asset allocation across equity, debt, and gold – structured around your specific retirement timeline and goals. Explore how we approach retirement planning.
Frequently Asked Questions
Are Sovereign Gold Bonds still available in 2026?
Fresh SGB issuances have been discontinued as of FY 2024-25. No new tranches have been announced since then. Existing SGBs continue to trade on BSE and NSE on the secondary market. New investors can buy them there at prevailing market prices, typically at a small premium to current gold prices.
What happens to my existing SGB at maturity?
At the end of the 8-year term, the RBI will credit the current gold price (based on the previous week’s average) in rupees directly to your registered bank account. The capital gain from this maturity payment is fully exempt from tax. No action is needed from your side if the bank account and demat/nominee details are current.
Can I sell my SGB before maturity?
Yes, either through the early exit window (from the 5th year anniversary, on interest payment dates) with RBI, or by selling on BSE/NSE on the secondary market. Secondary market sales at any time are possible but attract capital gains tax. LTCG at 12.5% applies if held more than 24 months. Only RBI-mediated maturity redemption (8-year term) is tax-free.
Is Gold ETF better than SGB now that SGBs are discontinued?
For existing SGB holders: continue holding to maturity for the tax-free maturity benefit. For new investors: if you find SGBs on the secondary market at a small premium, they can still be better than Gold ETFs for long-term (8-year+) holding due to the 2.5% interest and tax-free maturity. If the secondary market premium is high or you need more liquidity, Gold ETFs are the cleaner choice.
Before You Go
Related reading: 10 Investment Mistakes That Cost Indian Investors Lakhs and Mutual Fund Pollution: Why Too Many Schemes Is Costing You Money.
Do you currently hold SGBs, Gold ETFs, or physical gold? What has worked best for you? Share in the comments below.
One question for you: Given that fresh SGBs are no longer available, what is your current preferred format for gold allocation – secondary market SGBs, Gold ETFs, or something else?
The sovereign gold bond scheme, which was launched in 2015, is basically government securities denominated in grams of gold. Sovereign gold bonds come with a maturity period of 8 years, with an exit option from the fifth year. Sovereign gold bonds are also traded on stock exchanges within a fortnight of issuance, offering an early exit option for investors though liquidity is poor here.
Hi, nice article.
When compared with Gold ETF, and Gold Mutual Funds i see advantages here as it can be redeemed at any point of time and moreover after 1 year no tax applicable.
So could you please provide a comparison of Gold Soverign bond / Gold ETF / Gold Mutual Funds etc in your next article that will definitely help readers to choose the option.
I have few observations so far on Sovereign Gold Bond Scheme:
1. Exit option only after 5 years is bottleneck for this bond scheme.
2. Also the interest earned semi-annually would add up to the bracket of Income earned from other source and will be tax prevailing tax bracket. So in case of individual in 30% tax bracket effective return would only be 1.9% (2.75%*0.691).
3. Individual cannot time the investment; he is at the mercy of RBI to issue next tranche of investment series.
Considering the above issues, Gold Mutual Funds (FOF) are more investor friendly in in terms of ease, flexiblity, better returns and apparent investment options as it ticks all the above check-points for me.
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