India’s first sovereign gold bonds to net investors 128% returns over 8 years

The first tranche was issued at a price of ₹2,684 per gram in 2015. In the SGB scheme, the gold bonds are repayable on the expiration of eight years from the date of the issue of the gold bonds.

Investment in the Sovereign Gold Bonds (SGB) is only permitted to resident Indian entities, including as individuals, HUFs, Trusts, Universities, and charitable organisations. Investors can buy SGB online through SBI, HDFC Bank, PNB, Canara Bank, ICICI Bank, among other banks.

For investors applying online and paying against the application using the digital method, the issue price of the Gold Bonds will be ₹50 per gram less than the nominal value. The bonds will be denominated in units of one gram of gold and multiples thereof.

SGBs are government securities denominated in grams of gold. They were launched to reduce the demand for physical gold by providing an alternative investment instrument linked to gold. The bonds were sold through scheduled commercial banks and designated post offices.

The investors will be compensated at a fixed rate of 2.50% per annum payable semi-annually on the nominal value.

The interest on SGBs shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). Capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of the SGB.