SGBs earn an annual interest of 2.5% p.a, which is credited in the investor’s account semi-annually. The interest received is taxed as per the investor’s income tax slab. In case SGBs are redeemed after 8 years, i.e., upon maturity, no capital gains taxes are payable.
If SGBs are sold within 12 months of purchase, short-term capital gains tax will be applicable, as per your tax slab. If sold after 12 months, LTCG (long-term capital gains) tax will be applicable at the rate of 12.5%, minus indexation benefits.
However, note that indexation benefits are offered to an investor when transferring the SGB unit from one person to another till or before 23 July 2024. Indexation benefits on capital gains are not applicable for any SGBs transferred or sold after 23 July 2024.
