SGB Calculator
Calculate Sovereign Gold Bond returns — 2.5% annual interest plus gold price appreciation, with tax-free capital gains on maturity.
₹1,00,000
₹10,000₹50L
₹6,500
₹3,000₹10K
10%
1%20%
8 years
5yr8yr
30%
0%30%
Total₹1.3L
Invested15%
Returns85%
Gold Appreciation
₹1,14,359
Total Interest
₹20,000
Net Returns
₹1,28,359
Breakdown
Investment₹1,00,000
Gold Appreciation (tax-free)₹1,14,359
Interest (8 years @ 2.5%)₹20,000
Tax on Interest (30%)-₹6,000
Net Returns₹1,28,359
Effective CAGR10.9%
SGB Returns Over Time
₹2,28,359
| Year | Gold Value | Cumulative Interest |
|---|---|---|
| 1 | ₹1,10,000 | ₹2,500 |
| 2 | ₹1,21,000 | ₹5,000 |
| 3 | ₹1,33,100 | ₹7,500 |
| 4 | ₹1,46,410 | ₹10,000 |
| 5 | ₹1,61,051 | ₹12,500 |
| 6 | ₹1,77,156 | ₹15,000 |
| 7 | ₹1,94,872 | ₹17,500 |
| 8 | ₹2,14,359 | ₹20,000 |
| Year | Gold Value | Interest | Return |
|---|---|---|---|
| 1 | ₹1,10,000 | ₹2,500 | ₹12,500 |
| 2 | ₹1,21,000 | ₹5,000 | ₹26,000 |
| 3 | ₹1,33,100 | ₹7,500 | ₹40,600 |
| 4 | ₹1,46,410 | ₹10,000 | ₹56,410 |
| 5 | ₹1,61,051 | ₹12,500 | ₹73,551 |
| 6 | ₹1,77,156 | ₹15,000 | ₹92,156 |
| 7 | ₹1,94,872 | ₹17,500 | ₹1,12,372 |
| 8 | ₹2,14,359 | ₹20,000 | ₹1,34,359 |
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What are Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India. They offer a unique combination of gold price appreciation + 2.5% annual interest, making them the most efficient way to invest in gold. Unlike physical gold, there are no making charges, no storage costs, and no risk of theft.
SGB Tax Benefits
SGBs have the best tax treatment among all gold investment options:
- Capital gains on maturity: Completely tax-free if held till maturity (8 years). This is the biggest advantage — no other gold investment offers this.
- Interest income: The 2.5% annual interest is taxable at your income tax slab rate. This is the only taxable component.
- Early redemption: If you exit after 5 years (the lock-in period), capital gains are taxed as long-term capital gains at 20% with indexation.
SGB vs Physical Gold vs Digital Gold
- SGB: 2.5% interest + tax-free appreciation on maturity. No making charges, no storage cost. Best for long-term investors (5-8 years).
- Physical Gold: Making charges of 8-25% for jewelry. Storage risk. 3% GST. Capital gains taxed. Best for wearing, not investing.
- Digital Gold: No making charges. Can buy from ₹1. But no interest, capital gains are taxed, and platforms charge a spread. Best for small, short-term investments.
- Gold ETFs/Mutual Funds: Track gold price. Expense ratio of 0.5-1%. Capital gains taxed. More liquid than SGBs. Best for those who need liquidity.
Frequently Asked Questions
How do I buy Sovereign Gold Bonds?
SGBs are issued by RBI in tranches throughout the year. You can buy them through banks, post offices, stock exchanges (NSE/BSE), and online platforms like Zerodha, Groww, etc. There is a ₹50/gram discount for online purchases. Minimum investment is 1 gram, maximum is 4 kg per financial year for individuals.
What is the lock-in period for SGB?
SGBs have a total tenure of 8 years with an exit option after 5 years (on interest payment dates). You can also sell on stock exchanges anytime if you bought in demat form, but the tax-free benefit on capital gains only applies if held till maturity.
Is the 2.5% interest on SGB compounded?
No, the 2.5% interest is paid semi-annually (every 6 months) directly to your bank account. It is simple interest calculated on the initial investment amount (issue price), not compounded. The interest is taxable at your income tax slab rate.
What happens if gold price falls during SGB tenure?
If gold price falls, your capital value decreases, but you still receive the 2.5% annual interest. On maturity, you receive the prevailing gold price (which could be lower than issue price) plus all interest earned. The interest provides a cushion against moderate price declines.