SGB total return projection.
Total value at maturity
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Gold value
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Interest received (2.5%)
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Your breakdown
Updates live as you type| Component | Amount | Tax at maturity |
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Gold that pays you to hold it
Sovereign Gold Bonds are the rare instrument that gives you gold’s price exposure and an income on top. Issued by the Reserve Bank of India on behalf of the government, each bond is denominated in grams of gold, so its value tracks the metal’s price rupee for rupee. On top of that capital movement, the bond pays a fixed 2.5% a year, calculated on the original issue price and credited to your bank account every six months. Physical gold, a coin in a locker or jewellery in a safe, pays you nothing and quietly costs you in storage, insurance, and making charges. SGBs strip all that away. The term is eight years, with an exit option from the fifth year on interest-payment dates, and the bonds are held in demat or RBI records so there is no purity worry and no theft risk. This calculator projects the gold value plus the interest you collect over the holding period.
The tax break that makes SGBs special
The headline reason to choose SGBs over every other form of gold is the capital gains treatment. If you hold to the full eight-year maturity, the entire capital appreciation is exempt from tax. Not concessional, exempt. Gold ETFs, gold funds, and physical gold all attract capital gains tax on the same price rise, so an SGB held to maturity can comfortably out-return them after tax even if the gold price moves identically. There is one honest caveat: the 2.5% interest is fully taxable as income from other sources at your slab rate, in the year it is received. So the bond is part tax-free, part taxable. If you exit early on the secondary market or via the buyback window, the gains there are taxable, and you lose the maturity exemption, which is why patience genuinely pays here.
Worked example: 100 grams held the full eight years
Take 100 grams bought at an issue price of ₹7,000 a gram, a ₹7,00,000 investment, with gold assumed to appreciate 8% a year over the eight-year term. The total return splits into a tax-free capital piece and a taxable interest piece.
The ₹5.96 lakh capital gain comes home tax-free, while only the ₹1.4 lakh of interest is taxable along the way. The chart sets the appreciated gold value beside the interest you collect over the eight years.
Buying, the discount, and a practical caveat
When new tranches are open, the RBI offers a ₹50 per gram discount for buying online and paying digitally, a small but real sweetener. Issue price is set as the average closing price of 999-purity gold over the three working days before the subscription window. One thing to flag honestly for 2026: the government slowed fresh SGB issuance considerably after the cost of redeeming earlier tranches rose with the gold price, so new primary tranches have become infrequent. If none is open, you can still buy existing bonds on the stock exchange, though they often trade at a premium to their underlying gold value and liquidity can be thin. Treat SGBs as a buy-and-hold allocation of perhaps 5% to 10% of a portfolio, a hedge and a diversifier, not a core growth engine, since gold’s long-run real return is modest compared with equity.
Can I sell before eight years?
Yes, two ways. You can use the RBI early-redemption window available from year five on interest-payment dates, or sell on the stock exchange any time if the bond is in demat form. Either route makes the capital gain taxable, so the tax-free benefit only applies to bonds held the full eight years to maturity.
Is the 2.5% interest on my current value or the issue price?
On the issue price, the amount you originally paid, not the appreciated value. So if gold doubles, your interest in rupees stays the same. The calculator follows this rule, computing interest on the invested amount rather than the growing gold value.