Sovereign gold bonds (SGBs) have emerged as one of the popular ways to invest in yellow metal. The sovereign gold bonds 2023-24 series-IV tranche is available for subscriptions from February 12, 2024, to February 16, 2024. How is your SGB investment taxed? ET Wealth Online explains.
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Tax benefits of SGBs
If you hold SGBs for the entire tenure of eight years, there will be no capital gains tax on maturity. The maturity proceeds of SGBs will also be tax-free on maturity.
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How will your investments be taxed if you sell SGB before maturity?
If you prematurely sell SGBs before maturity, a capital gains tax will apply to it. “Capital gains tax is applicable only on the profit earned on selling SGBs before maturity,” according to the FAQ released by ICICI Direct.
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How will interest income from SGBs be taxed?
You get a fixed interest rate of 2.5% per annum on your sovereign gold bonds for a tenure of eight years. The interest is paid on a half-yearly basis.This income is taxable at the hands of the investors at their respective income tax slabs.
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SGBs: Indexation benefits that you get
SGBs also offer indexation benefits. If an investor holds SGBs for more than three years, they can claim the benefit of indexation on capital gains.
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If you sell SGBs on the stock exchange…
If you sell your SGBs on a stock exchange, securities transaction tax (STT) is also applicable. STT is a tax payable on the value of securities transacted on the stock exchange.
