Know all about Sovereign Gold Bond interest rates

Learn about Sovereign Gold Bond interest rates and how its paid.
Know all about Sovereign Gold Bond interest rates
2 min read
09 October 2023

Are you interested in investing in the Sovereign Gold Bond Scheme but unsure about the interest rates? Here’s everything you need to know about Sovereign Gold Bond interest rates.

The Sovereign Gold Bond Scheme is a programme backed by the government that lets people buy gold on paper. The Reserve Bank of India (RBI) decides the interest rates on Sovereign Gold Bonds, which can change from time to time. Interest on the bond is calculated based on the price of gold at the time that it was bought, and it is paid every six months.

This means that if the price of gold increases during the tenure of the bond, the interest you earn also increases. This feature makes Sovereign Gold Bonds different from traditional fixed income investments such as fixed deposits or bonds. As for other bonds, the interest rate is fixed at the time of investment and remains the same for the entire tenure of the investment. The variable interest rate on Sovereign Gold Bonds provides an opportunity to benefit from the price appreciation of gold.

The sovereign gold bond interest rate is a crucial factor for investors considering these government-backed gold bonds in India. The interest rate on sovereign gold bonds is typically lower than other fixed-income investments, making them an attractive option for gold enthusiasts. The interest earned on sovereign gold bonds is taxable, but the capital gains upon maturity are exempt from capital gains tax if held until maturity. It is essential for investors to check the latest sovereign gold bond interest rates and consider their investment horizon and financial goals before investing in these bonds.

What is the current rate of Interest on Sovereign Gold Bond?

The current interest rate for the Sovereign Gold Bond Scheme is 2.5% per annum. This rate is fixed for the entire tenure of the bond, which is eight years. The gold bond interest is credited to the investor's bank account every six months. The interest earned on the bond is taxable, but there is no tax on the principal amount invested.

One of the benefits of investing in the Sovereign Gold Bond Scheme is that it offers a fixed interest rate. This means that investors can know exactly how much interest they will earn on their investment for the entire tenure of the bond.

Another benefit of the Sovereign Gold Bond Scheme is that bonds can be traded on the stock exchange and can be redeemed before the maturity date. It offers you the liquidity to pledge it as collateral for loans.

How can you pay for Sovereign Gold Bond?

Investing in the Sovereign Gold Bond scheme is easy and can be done online. You only need your PAN and basic KYC documents to invest in the scheme. The payment can be made with cheque, cash, or digital payment modes.

Sovereign Gold Bonds are a great way to invest in gold and receive returns, but it's also important to understand the link between gold bonds and loans. These bonds are not only one of the best ways to invest, but also a great way to get access to quick funds. These bonds can also serve as collateral for loans taken out to meet your financial needs.

If you need a loan to cover some urgent expenses, you may look at the gold loan offered by Bajaj Finance. Benefit from low gold loan interest rates and receive the best value for a loan secured by your gold jewellery, with loan amounts ranging from Rs. 5,000 to Rs. 2 crore.

Visit the Bajaj Finance website to apply for a gold loan today.

Frequently asked questions

Is Sovereign gold bond a good investment?

Sovereign Gold Bonds (SGBs) can be a fantastic investment choice. They offer the security of gold, regular income through fixed interest payments, and potential for capital appreciation. Backed by the government, SGBs provide a reliable and trustworthy investment avenue. With their tax efficiency and diversification benefits, investing in SGBs can be a step towards achieving your financial goals with confidence and optimism.

Is the interest on sovereign gold bonds taxable?

Yes, the interest earned on Sovereign Gold Bonds (SGBs) is taxable as per the individual's income tax slab. It is considered a part of the investor's total income and is subject to tax. However, the capital gains tax on redemption of SGBs held until maturity is exempted, providing a potential tax advantage.

How is interest credited on sovereign gold bond?

The interest on Sovereign Gold Bonds (SGBs) is credited semi-annually to the investor's bank account. The interest payment dates are fixed and communicated by the Reserve Bank of India (RBI) at the time of issuance. The interest amount is calculated based on the face value of the bond and the prevailing interest rate, and it is directly credited to the investor's registered bank account through electronic transfer.

Who is eligible to invest in Sovereign Gold Bond schemes?

Eligibility for investing in Sovereign Gold Bond schemes is quite broad. Individual investors, HUFs, trusts, universities, charitable institutions, and other entities can invest in these bonds. The only condition is that the investor must be a resident Indian or eligible for investment in accordance with relevant laws.

Can I sell my SGB before 5 years?

Yes, you can sell your Sovereign Gold Bond (SGB) before the 5-year lock-in period, but you'll need to do so through the secondary market, such as stock exchanges. Keep in mind that selling before 5 years may lead to capital gains tax, and the exact terms can vary, so it's advisable to consult with a financial expert.

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