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Sovereign Gold Bonds, discontinued in February 2024, offered tax-free gains and 2.5 percent interest. Investors now buy SGBs via apps.
SGB offers 2.5 percent annual interest and tax benefits on capital gains.
SGB: Sovereign Gold Bonds (SGB), the government-backed gold scheme, have delivered eye-popping returns to investors since inception. SGBs offered a mix of long-term, tax-free capital appreciation along with a fixed 2.5 per cent annual interest.
Due to the rising exchequer cost, the government discontinued the scheme in February 2024. With the scheme now discontinued, many investors are turning to the secondary market to buy SGBs.
How Can You Purchase SGBs From the Stock Market?
Investors can buy Sovereign Gold Bonds from the secondary market through any trading app such as Zerodha, Groww or Upstox, just like purchasing a normal share. They have to go to search bar and type “SGB” in the app, check the series name and maturity year, and look at the market price and trading volume, as some series have very low liquidity.
It is safer to place a limit order because prices can vary widely due to the bid–ask spread. Once the units are credited to your demat account, you will receive the 2.5% annual interest directly in your bank account. If you hold the bond till maturity, the capital gains remain completely tax-free, even if you bought it from the secondary market.
Is It Worth Buying SGBs From the Secondary Market?
Buying SGBs from the secondary market makes sense only if they are available at a small premium, said Amar Ranu, Head – Investment Products & Insights at Anand Rathi Share & Stock Brokers. “If the premium is large, it materially reduces the upside versus buying a gold ETF,” Ranu added.
SGBs Vs ETFs: Which Is Better?
When asked what investors should choose between SGBs and ETFs, Aditya Agrawal, CFA, Chief Investment Officer at Avisa Wealth Creators told News18 that SGBs are preferable when you have a long-term horizon (5–8 years), want steady semi-annual interest income at 2.5%, comfortable with relatively limited liquidity and aim to minimize capital gains tax.
“Gold ETFs are best suited for investors seeking short to mid-term gold exposure, offering strong liquidity without the fixed income component,” Agrawal said.
Ranu recommended gold ETFs, saying they are easier to trade and come with lower implicit costs. “For tax-efficient long-term holding plus the fixed coupon, SGBs can be better only if the premium is small relative to expected gains and the investor really plans to hold till maturity,” he said.
Ravi Singh, Chief Research Officer at Master Capital Services, explained that both SGBs (from the secondary market) and gold ETFs can work depending on the investor’s goal. “SGBs suit long-term investors because, apart from gold price movement, they also offer a fixed 2.5% annual interest. The downside is liquidity, which is not always smooth, so the exit may not be immediate. Gold ETFs, however, are easy to trade and offer more flexibility,” Singh added.
Navy Vijay Ramavat, Managing Director, Indira Securities added that Gold ETFs are simple. You can buy or sell anytime, even in tiny amounts.
SGBs, on the other hand, are for the patient ones. You get a fixed 2.5% interest every year, and if you hold them till maturity, whatever profit you make becomes tax-free. That’s why SGBs usually give better long-term returns but they need commitment and a slightly bigger-investor mindset, he added.
Is the Tax Treatment the Same for SGBs Bought From the Secondary Market?
The capital gains exemption on SGBs applies only when the bond is held till maturity and redeemed with the RBI, Singh said. If sold on the exchange, normal capital gains tax applies, similar to gold ETFs.
Ranu added that if an investor sells SGBs on the exchange, gains become taxable. “SGBs or other gold investments qualify as long-term if held for more than 24 months; long-term capital gains on such transfers are taxed at 12.5% (without indexation) for transfers on or after 23 July 2024. Short-term gains (24 months or less) are taxed at the investor’s slab rate. Only redemption at maturity — or redemption directly with the RBI — is exempt from capital gains tax,” he explained.
Click here to add News18 as your preferred news source on Google. December 05, 2025, 15:37 IST
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