Is sovereign gold bond taxable?

Bonds
1

Do I have to pay tax on sovereign gold bonds too?

2

If you hold your Sovereign Gold Bonds (SGBs) until maturity (8 years) or redeem them early via RBI (after 5 years), the capital gains are fully exempt from tax; you don’t pay any capital gains tax.

However, if you sell your bonds before maturity, the taxation changes:

  • If you sell or hold them for more than one year, it’s a Long-Term Capital Gain (LTCG). You’ll pay 12.5% tax without indexation.
  • If you sell within one year, it’s considered a Short-Term Capital Gain (STCG) and gets added to your regular income. You’ll pay tax as per your income slab.

Now, there is also the interest income of 2.5% per year, paid semi-annually. This part is taxable under ‘Income from Other Sources.’ The government doesn’t deduct TDS, so you’ll need to include it while filing your return.

I find SGBs incredibly tax-efficient if you plan to hold them long-term. They give you gold exposure, steady interest, and a handsome tax break.