Already hold Sovereign Gold Bonds? What you need to know now

Sovereign Gold Bonds are government bonds priced in grams of gold. You held gold’s price movement, without holding the metal, and earned interest on top. The government stopped issuing new ones after early 2024. If you already own some, nothing about your bonds’ interest or maturity has changed, but the tax treatment on redemption has.

What your bond still gives you. Per RBI’s FAQs, each SGB pays a fixed 2.5% a year on the amount you first invested, credited to your bank account every six months. The bond runs for 8 years. At the end, you’re paid the gold value of your grams, in rupees.

How the payout is priced. RBI sets the redemption price as the simple average of the closing price of 999-purity gold, published by the India Bullion and Jewellers Association, over the three business days before the payout date. It announces the figure in a press release for each tranche.

An illustration. Say you bought 10 grams at 5,000 rupees a gram, an investment of 50,000 rupees (illustrative numbers). You’d get 2.5% of 50,000, or 1,250 rupees a year, as interest. If gold averages 15,000 rupees a gram at maturity, you receive 1.5 lakh rupees for your 10 grams.

Three ways out. You can hold to maturity. You can exit early through RBI after the fifth year, on an interest date, by applying through the bank, post office or agent you bought from, ahead of that date. Ask them for their cut-off. Or, if your bonds are in demat form, you can sell them on the stock exchange any time, at whatever price buyers will pay, which can differ from gold’s value.

The 2026 tax change. Interest has always been taxable at your slab rate, though no TDS is cut on it. The big shift is on redemption. Until March 2026, redemption by an individual was free of capital gains tax. From 1 April 2026, the Finance Act, 2026 keeps that exemption only for an individual who has held the bond from the date of original issue until the 8-year maturity. Early redemption, and bonds bought on the stock exchange, are taxed as capital gains instead.

Did you know? RBI’s FAQs say SGBs can also be used as security for a loan, though whether to lend is the lender’s call, and that interest on them is paid without any tax deducted at source. That leaves it to you to show the interest as income when you file. Check RBI’s current FAQs before you rely on this.

What to check for your own bonds. Find the issue date and series on your certificate or demat statement, so you know your fifth-year and maturity dates. Note how you got them: at issue, or on the exchange. That decides the tax. The rule is new, so if your situation is unusual, a tax professional can confirm how it applies to you.

The takeaway. Your existing bonds keep paying 2.5% a year and mature after 8 years. No new bonds are on offer, and from April 2026 only those who hold from the original issue to maturity keep the tax-free payout. Know your dates, know how you bought, and check the rules before you exit.

More to read: gold as an investment, gold ETF vs gold fund, and capital gains tax, explained.