SGBs (Sovereign Gold Bonds) are taxed differently at different stages, including acquisition, interest income, and capital gains.

  • Acquisition: When you purchase SGBs, there is no tax on the purchase price.
  • Interest Income: In addition to earnings from gold price appreciation, you will receive an extra 2.5% interest every year on the launch price of the bond, payable every 6 months. This interest is taxable as per your income tax slab rate. However, there's no TDS on the Interest amount.
  • Redemption: When you redeem or sell the SGBs, the capital gains are calculated based on the selling price minus the acquisition cost. 
  1. If you hold the bonds for more than three years, it is considered a long-term capital gain, and if it is held for less than three years, it is a short-term capital gain, taxed at your applicable income tax slab rate.
  2. If you sell SGBs after holding them for more than three years, the capital gains are taxed at a flat rate of 20% with indexation benefits. Indexation adjusts the purchase price for inflation, reducing the taxable gains.
  3. If you sell SGBs at maturity, the capital gains are tax free.