Beginner guide · 5-minute read
Sovereign Gold Bonds, explained simply
A Sovereign Gold Bond (SGB) is a Government of India bond whose value follows the price of gold, and it pays 2.5% interest a year on top. No new bonds have been issued since 2023-24 Series IV (Feb 2024), but older ones trade on the stock exchange.
Checked on 15 Oct 2026 against RBI's gold price data (Handbook of Statistics, Jul 2026), SEBI's digital gold caution (Nov 2025) and the 2026 SGB tax change.
In one minute
- Who runs it
- The Government of India, through RBI.
- What it pays
- 2.5% a year on the issue price, every 6 months, plus the gold price for each gram at maturity.
- How long
- 8 years from issue. You can cash in with RBI after 5 years, on an interest date.
- Tax
- Interest at your slab rate. The gain at maturity is tax-free only if you bought at issue and held throughout (from 1 April 2026).
How it works, with real numbers
Say you hold 10 grams of the last series, issued at ₹6,263 a gram. You get ₹783 interest every 6 months: 2.5% of ₹62,630 a year, split in two.
Gold was ₹14,606 a gram on 14 Oct 2026. If it grows 9.7% a year, the bond would pay about ₹2,43,034 at maturity in 2032, about 5.5 years away. Held since issue, that gain is tax-free.
Buy the same 10 grams on the exchange today instead, at ₹14,606 a gram, and you'd owe about ₹12,607 tax on the gain at maturity. The interest is also smaller compared with what you pay: 1.1% a year of today's price.
Try the SGB calculatorHow the gold price has moved
Gold averaged ₹1,18,421 per 10 grams in 2025-26, about 17 times its 2005-06 average. Over every 10-year stretch of the last 20 years it grew between 5.7% and 16.1% a year.
- Gold pays no interest, so you gain only when its price rises, and it has had long flat spells: after 2012-13, the yearly average didn't beat that level again until 2018-19.
- The range used here, 7.6% to 12.4% a year (middle 9.7%), is the middle half of those 10-year outcomes, before costs and tax.
- These are yearly averages, so short spikes and dips are smoothed out. RBI notes that prices up to 1999-2000 and from 2000-01 come from different sources, so they may not be strictly comparable.
See how the range is worked out
| 10 years | Grew a year |
|---|---|
| 2005-06 to 2015-16 | 14.4% |
| 2006-07 to 2016-17 | 12.4% |
| 2007-08 to 2017-18 | 11.4% |
| 2008-09 to 2018-19 | 9.2% |
| 2009-10 to 2019-20 | 8.9% |
| 2010-11 to 2020-21 | 9.7% |
| 2011-12 to 2021-22 | 6.4% |
| 2012-13 to 2022-23 | 5.7% |
| 2013-14 to 2023-24 | 7.6% |
| 2014-15 to 2024-25 | 10.7% |
| 2015-16 to 2025-26 | 16.1% |
See every year's price (41)
| Year | Average price, 10 grams |
|---|---|
| 2025-26 | ₹1,18,421 |
| 2024-25 | ₹75,842 |
| 2023-24 | ₹60,624 |
| 2022-23 | ₹52,731 |
| 2021-22 | ₹47,999 |
| 2020-21 | ₹48,723 |
| 2019-20 | ₹37,018 |
| 2018-19 | ₹31,193 |
| 2017-18 | ₹29,300 |
| 2016-17 | ₹29,665 |
| 2015-16 | ₹26,534 |
| 2014-15 | ₹27,415 |
| 2013-14 | ₹29,190 |
| 2012-13 | ₹30,164 |
| 2011-12 | ₹25,722 |
| 2010-11 | ₹19,227 |
| 2009-10 | ₹15,756 |
| 2008-09 | ₹12,890 |
| 2007-08 | ₹9,996 |
| 2006-07 | ₹9,240 |
| 2005-06 | ₹6,901 |
| 2004-05 | ₹6,145 |
| 2003-04 | ₹5,719 |
| 2002-03 | ₹5,332 |
| 2001-02 | ₹4,579 |
| 2000-01 | ₹4,474 |
| 1999-00 | ₹4,394 |
| 1998-99 | ₹4,268 |
| 1997-98 | ₹4,347 |
| 1996-97 | ₹5,071 |
| 1995-96 | ₹4,958 |
| 1994-95 | ₹4,667 |
| 1993-94 | ₹4,532 |
| 1992-93 | ₹4,104 |
| 1991-92 | ₹4,298 |
| 1990-91 | ₹3,452 |
| 1989-90 | ₹3,229 |
| 1988-89 | ₹3,175 |
| 1987-88 | ₹3,082 |
| 1986-87 | ₹2,323 |
| 1985-86 | ₹2,125 |
Source: RBI Handbook of Statistics, Table 35, the yearly average gold price in Mumbai.
Pros and cons
Good things
- Backed by the Government of India. No risk of the issuer failing.
- Interest on top of gold. 2.5% a year on the issue price, which gold ETFs and coins don't pay.
- No GST, making charges or storage. It's held in your demat or RBI account.
- Tax-free gain for original holders. If you bought at issue and hold to maturity.
Things to watch
- No new issues. Nothing since 2023-24 Series IV (Feb 2024).
- Thin trading. Few bonds change hands on the exchange, and prices can sit above or below the gold price.
- Small interest on today's price. The 2.5% is on the issue price, so on today's price it's about 1.1% a year.
- Taxed if bought on the exchange. From 1 April 2026, the gain is taxed at 12.5% for anyone who didn't buy at issue.
- Gold can fall. The bond's value follows the gold price down as well as up.
Is it right for you?
Mistakes to avoid
- Selling an original bond early. You give up the tax-free gain at maturity, and the exchange price may be below the gold price.
- Paying a big premium on the exchange. Compare the bond's price with today's gold price before you buy.
How to start
- If you hold one: find its series, issue price and maturity date on your RBI, bank or demat statement.
- To buy one: find SGB series on your broker's app, compare the price with today's gold price, and place a limit order.
- Keep a note of the interest dates; the interest goes to your bank account.
Words you'll see
- Series
- Each batch of bonds the government issued, e.g. 2023-24 Series IV.
- Issue price
- The price a gram when that series was issued; interest is worked out on it.
- Maturity
- The end of the bond's 8 years, when you get the gold price for each gram.
- Premature redemption
- Cashing in with RBI before maturity, allowed after 5 years on an interest date.
This guide explains how things work. It is not advice on what you should invest in. NetReturns is not SEBI-registered.