Sovereign Gold Bonds (SGB) are a way to invest in gold without buying real gold. You don’t need to buy gold coins or jewellery. Instead, you buy gold in digital form. These bonds are issued by the RBI for the Government of India, so they are very safe. People like SGBs because the value moves with gold prices, and you also earn extra Interest on it.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds are a way to invest in gold through bonds. Instead of buying real gold, you buy a bond that stands for a certain amount of gold. For example:
1 unit = 1 gram of gold
These bonds follow the market price of gold. So if gold prices go up in the market, the value of your bond also goes up.
Who Issues Sovereign Gold Bonds?
SGBs are issued by the Government of India and managed by the RBI. Because of this, they are one of the safest ways to invest in gold.
Benefits of Sovereign Gold Bonds
After learning how to buy Sovereign Gold Bonds online, it is also important to know their benefits. Here are the main advantages explained in a simple way:
1. Listed on Stock Exchanges + Earn Interest
Sovereign Gold Bonds are listed on stock exchange like NSE and BSE. Because of this, you can buy or sell them just like other financial products.
SGBs also give 2.50% interest per year, and this money is sent to your bank account every six months. This Interest is paid for the full 8-year period of the bond. Physical gold does not give any interest.
2. Tax Benefits on Maturity
If the price of gold increases while you are holding the bond, you can make a profit. In SGBs, this profit is tax-free if you keep the bond till maturity. This is a big benefit because gold prices often rise over the long term.
3. Safer Than Physical Gold
SGBs are given by the RBI to the Government of India, so the risk of default is very low. There is also no risk of theft, loss, purity issues, or damage like physical gold or jewellery. Because of this, SGBs are safer and more convenient.
4. Easy to Buy and Track Online
You can buy SGBs online from banks, brokers, or government platforms. After buying, you can check them in your demat account. You can easily see the price, Interest, and maturity details in one place without visiting any office.
5. Use SGBs to Get a Loan
Banks may give loans on SGBs. This means you don’t have to sell them when you need money. You can keep SGBs as security and get up to 70% to 75% of their value as a loan. This gives fast money without breaking your investment.
Why Do People Buy SGB Instead of Physical Gold?
Many people prefer SGB over real gold because:
- No storage cost
- No theft
- No making charges
- Pays 2.50% interest
- Government safe
- Good for long-term
Physical gold gives profit only when the price rises. SGB gives profit + extra Interest.
Features of Sovereign Gold Bonds
Important things to know about SGB:
- Total period: 8 years
- You can exit after 5 years
- 1 unit = 1 gram
- Gives 2.50% yearly interest (paid every 6 months)
- No capital gains tax at maturity
Because of these, SGB suits long-term investment.
When Can You Buy Sovereign Gold Bonds (SGB)?
SGBs are not sold every day. The RBI opens buying periods called tranches a few times a year. During these periods, you can apply and pay for SGBs.
If you buy online, you get a discount of ₹50 per gram, which is not available in offline applications.
Who Can Buy Sovereign Gold Bonds?
The following can apply for SGB:
- Indian individuals
- HUF (Hindu Undivided Family)
- Trusts
- Charitable institutions
- Universities
NRIs cannot buy new SGBs. However, if they bought SGBs when they were living in India, they can continue to hold them.
How to Buy Sovereign Gold Bonds (SGB) Online?
It is easy to buy SGB online. You can buy them from different platforms.
1: Buy SGB through Your Bank’s Net Banking
Most big banks let you buy SGB online.
How to buy:
- Login to net banking
- Go to Investments or the SGB section
- Select Buy
- Choose grams
- Enter details
- Pay online
After buying, RBI gives you a digital certificate.
Banks that offer SGB online:
- SBI
- HDFC
- ICICI
- Kotak
- Axis
- Bank of Baroda
- Yes Bank
- IDBI
Buying from banks is safe and easy.
2:Buy SGB through a Demat Account/Broker
You can buy SGB using demat apps like:
- Zerodha
- Groww
- Upstox
- Angel One
- ICICI Direct
- HDFC Securities
How to buy on these platforms:
- Login to the trading app or website
- Go to the Bonds or Sovereign Gold Bonds section
- Click Apply
- Enter how many grams you want to buy
- Make the payment
After the issue is completed, the SGB units will be credited to your demat account.
3: Buy through the RBI Retail Direct Portal
The RBI has launched the Retail Direct Portal, where people can buy government securities directly from the RBI.
How to buy SGB here:
- Register on the RBI Retail Direct portal
- Complete KYC
- Select Sovereign Gold Bonds
- Apply when the tranche is open
- Make a payment online
In this option, the SGB units are kept in a government securities account.
4: Buy Offline
If someone wants to buy offline, they can fill a physical form at:
- Banks
- Post offices
- Stock exchange members (BSE/NSE brokers)
After the purchase, offline buyers receive a physical certificate.
How Much Gold Can You Buy Through SGB?
Purchase limits:
- For individuals and HUF: up to 4 kg in a year
- For trusts and institutions: up to 20 kg in a year
- Minimum purchase: 1 gram
How to Redeem Sovereign Gold Bonds (SGB)?
SGBs mature after 8 years. Then you get money automatically, based on the gold price at that time. If you want to exit early, you can redeem after the 5th year on interest payment days. You can also sell your SGBs on the stock exchange if they are in demat.
Interest Benefit in SGB
SGB pays 2.50% interest every year on the money you invest. The Interest comes to your bank account two times in a year.
Example:
If you buy SGB worth ₹1,00,000, you will get ₹2,500 as yearly Interest.
Physical gold does not give this benefit.
Tax Benefits on Sovereign Gold Bonds (SGB)
SGB gives good tax advantages:
- No tax on profit at maturity
- Interest is taxable as normal income
- No GST and no making charges
Because of these benefits, SGB is tax-friendly for long-term investors.
Disadvantages of Sovereign Gold Bonds (SGB)
Some points to keep in mind:
- SGB is locked for a long period (8 years)
- Early exit is allowed only after 5 years
- Not suitable for short-term buying and selling
- Liquidity is lower compared to jewellery
Who should buy Sovereign Gold Bonds (SGB)?
SGB is a good choice for people who:
- Invest for the long term
- want gold without storage problems
- want tax benefits
- want a safe and stable option
- Invest for future wealth building
It is not suitable for traders who want quick buying and selling.
Conclusion
Sovereign Gold Bond is easy to buy online and safe to invest in. It can be buy through the banks, demat apps, or the RBI portal. It pays interest, and its value increases when gold prices rise. For long-term and tax-friendly gold investment, the Sovereign Gold Bond is a very good choice.
FAQ
- What does Sovereign Gold Bond mean?
SGB means you invest money, and the government gives you gold value in return.
- Who issues SGB?
The Government of India through the RBI.
- Is SGB a safe investment?
Yes, it is one of the safest forms of gold investment.
- What is the tenure of SGB?
The bond runs for 8 years, and you can exit after 5 years.
- How much Interest do SGB pay?
2.50% per year.
- How can I buy SGB online?
Through net banking, demat platforms, or RBI portal.
- What is the minimum purchase?
1 gram.
- Can I buy SGB offline?
Yes, in banks and post offices.
- Can I sell SGB before maturity?
Yes. After 5 years or sell their bonds on the stock exchange.
- Do SGB give better returns than physical gold?
Mostly yes, due to Interest + no storage cost.
- How are SGB stored?
In demat form or certificate form.
- Can NRIs buy SGB?
NRIs cannot buy new SGB, but can hold if purchased before becoming NRI.
- Is there any discount for online purchase?
Yes, ₹50 per gram discount is offered online.
- Are SGB good for long-term?
Yes, SGB is designed for long-term wealth building.
