SGB Tax Calculator
Sovereign Gold Bonds are exempt from capital gains tax if you redeem them, and taxed if you sell them. This works out what that choice is worth.
What the SGB tax calculator does
An SGB tax calculator shows what a Sovereign Gold Bond leaves after tax. Redeeming it — at maturity, or to the RBI from year five — is exempt from capital gains tax under Section 47(viic), however large the gain. Selling the same bond on the exchange is taxed at 12.5%. The 2.5% coupon is taxable either way.
Your inputs
The coupon is 2.5% of this figure for the whole term, never of what the bond is later worth.
Your assumption. Gold has no earnings and pays nothing, so there is no rate to derive — past decades have ranged from long flat stretches to sharp runs.
The bond runs 8 years. Redemption to the RBI opens in year 5; before that the only exit is a sale.
How do you exit?
This is the single most consequential input on the page. It changes the tax on the gain from nil to the full amount.
Which tax regime are you on?
SGB has no Section 80C deduction in either regime, so this changes nothing here.
Your income tax slab
What you keep after 8 years
₹11,40,594
The bond is worth ₹10,71,794 and has gained ₹5,71,794, none of which is taxed — redemption is not a transfer. Only the ₹1,00,000 of coupon is, at ₹31,200.
- Invested at issue
- ₹5,00,000
- Worth after 8 years
- ₹10,71,794
- Coupon received (2.5% a year)
- ₹1,00,000
- Tax on the coupon
- ₹31,200
- Tax on the gain
- Nil
- Return after tax
- 10.86%
Sovereign Gold Bonds are issued by the RBI on behalf of the Government of India and track the gold price, which can fall. GrowIQ Capital is a mutual fund distributor and does not distribute them. Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
Same bond, same gold, same day — two exits
Section 47(viic) provides that redeeming a Sovereign Gold Bond is not a transfer, so the capital gain is not taxed at all — there is no ceiling on it. Selling the identical bond to somebody else on the exchange is a transfer, and the same gain is fully taxable. Nothing about the bond differs between these two columns.
| Redeem the bond | Sell on the exchange | |
|---|---|---|
| What the bond is worth | ₹10,71,794 | ₹10,71,794 |
| Capital gain | ₹5,71,794 | ₹5,71,794 |
| Rate on that gain | 0% | 12.5% |
| Tax on the gain | ₹0 | ₹71,474 |
| Tax on the coupon | ₹31,200 | ₹31,200 |
| Left in your hand | ₹11,40,594 | ₹10,69,120 |
| Return a year after tax | 10.86% | 9.97% |
Holding to redemption is worth ₹71,474 here — that is the tax a sale of the same bond would have cost, and it is the whole of the difference between the two columns. At ₹12,500 a year, the coupon would take 5.7 years to earn the same amount.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
The 2.5% is taxable, and it shrinks as gold rises
Two things the headline rate hides. The coupon is fully taxable at your slab as income from other sources — the exemption covers the capital gain and nothing else, so ₹31,200 of the ₹1,00,000 received goes in tax whichever exit you take. And it is calculated on the price you paid at issue, never on what the bond is currently worth.
Coupon a year, in rupees
₹12,500
2.5% of the ₹5,00,000 you paid at issue. It never moves.
Which, on today's value, is
1.17%
The same rupees against a holding now worth ₹10,71,794.
The whole holding, after tax and 6% inflation
4.58%
Gold and coupon together. Before inflation it is 10.86%.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
No new Sovereign Gold Bonds are being issued
The last tranche was issued in February 2024 and the government has not issued since. So this is a calculator for bonds already held, or bought from another holder on the exchange — not for a subscription anyone can still make. A bond bought on the exchange is still redeemed by you at maturity, so the exemption on redemption is available on it; what you cannot do is buy in at the issue price.
There is no Section 80C deduction for an SGB and never was, in either regime. The tax benefit sits entirely at the other end, in the exemption on redemption — which is why the exit route matters more here than on any other page in this set.
Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
What this assumes
- A steady gold return, which gold does not have. The 10% is compounded evenly here for arithmetic. Real gold moves in long flat stretches broken by sharp runs, and the order matters to what you actually see at exit.
- Redemption at the RBI price, not the exchange price. Redemption pays the average of the closing gold price over the preceding three business days. Bonds often trade on the exchange at a discount to that, which is a further reason the two exits differ.
- The coupon is not reinvested. It is paid out half-yearly and treated here as received and taxed, not compounded. If you reinvest it, what it then earns is a separate question this page does not model.
- Premature redemption to the RBI is available only from year 5, on an interest payment date. Surcharge is excluded; the 4% cess is included. Whether a capital loss on a sale can be used to reduce other gains is not modelled.
No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Sovereign Gold Bonds are issued by the Reserve Bank of India on behalf of the Government of India; the principal tracks the gold price and can fall. GrowIQ Capital is a mutual fund distributor, neither distributes them nor provides tax advice — this is arithmetic on the figures you entered, for discussion with a qualified tax adviser.
How the SGB tax calculation works
Redeem → capital gain × 0%. Sell → capital gain × 12.5% after twelve months. Coupon × slab, either way.
Section 47(viic) provides that redemption of a Sovereign Gold Bond by an individual is not a transfer, so the capital gain is not taxed at all — there is no ceiling on the amount exempted. That covers redemption at the end of the eight-year term and premature redemption to the RBI from the fifth year, on an interest payment date. Selling the same bond on the exchange is a transfer: the gain is taxed at 12.5% if held more than twelve months, or at your slab plus cess if less. The ₹1.25 lakh exemption under Section 112A does not apply, because that provision is written for equity and does not reach a bond. Separately, the 2.5% coupon is taxable at your slab as income from other sources on both routes — the exemption covers the capital gain and nothing else — and it is calculated on the issue price rather than the current value, so its yield on the holding falls as gold appreciates. There is no Section 80C deduction for an SGB in either regime.
Frequently asked questions
Is the gain on a Sovereign Gold Bond tax free?
On redemption, yes, and completely. Section 47(viic) provides that redemption of an SGB by an individual is not a transfer, so the entire capital gain escapes tax with no ceiling on it. This applies to redemption at the end of the eight-year term and to premature redemption to the RBI from the fifth year. It does not apply if you sell the bond to somebody else on the exchange.
What happens if I sell my SGB on the stock exchange instead?
You lose the exemption. A sale is a transfer and the gain is taxable in the ordinary way — at 12.5% if you have held the bond more than twelve months, or at your slab rate plus cess if less. The bond is identical and the gain is identical; only the route out differs, and on a large holding that choice can be worth a substantial sum.
Is the 2.5% interest on an SGB taxable?
Yes, fully, at your slab rate as income from other sources. The exemption reaches the capital gain and nothing else. The coupon is paid half-yearly and is calculated on the price you paid at issue, never on what the bond is currently worth — so as gold appreciates the same rupee coupon becomes a smaller and smaller yield on the holding.
When can I redeem a Sovereign Gold Bond?
At the end of the eight-year term, or to the RBI from the fifth year onwards on an interest payment date. Both are redemption rather than transfer, so both carry the capital gains exemption. Before the fifth year the only way out is a sale on the exchange, which is taxed.
Can I still buy Sovereign Gold Bonds?
Not from a fresh issue. The last tranche was issued in February 2024 and the government has not issued since. Existing bonds can be bought from other holders on the exchange, though a bond bought that way is still redeemed by you, so the exemption on redemption is available on it.
Does SGB qualify for Section 80C?
No, in neither regime. There is no deduction for buying a Sovereign Gold Bond — the tax benefit is entirely at the other end, in the exemption on redemption. Your choice of tax regime makes no difference to an SGB at all.
GrowIQ Capital provides financial data analytics, market information and educational content. We are not a SEBI-registered Investment Adviser or Research Analyst. Nothing on this platform constitutes investment advice or a recommendation to buy or sell any security. No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Past performance is not indicative of future returns and does not guarantee future results.