FAQs
What is the process for how to buy sovereign gold bonds in secondary market?
You can buy SGBs via your demat account on NSE/BSE by searching “SGB” and selecting the desired series.
Are SGBs better than gold ETFs?
Yes. SGBs offer 2.5% annual interest and tax-free capital gains, while ETFs have expense ratios and no interest.
Can I sell SGBs anytime?
Yes, but liquidity is limited. Best to hold till 8 years for tax-free redemption.
Is sovereign gold bond interest taxable?
Yes, interest is added to your income and taxed as per your slab.
What happens if I buy SGBs at a premium?
You’ll still get full interest and tax-free maturity — the premium only affects short-term resale value.
Last week, Ramesh, a cautious investor from Pune, noticed gold prices had fallen 6% — the sharpest drop in over a decade. Yet, while physical gold was cheaper, he saw Sovereign Gold Bonds (SGBs) trading 6% higher on the NSE. Confused but curious, he wondered, “If gold is falling, why are people still paying a premium for SGBs?”
That’s exactly what we’ll answer today — along with the most important question: how to buy sovereign gold bonds in secondary market safely and profitably.
Key Questions This Article Answers
- Why are SGBs trading at a premium despite falling gold prices?
- How to buy sovereign gold bonds in the secondary market using a demat account?
- How do returns from SGBs compare with physical gold and ETFs?
- What are the tax benefits and risks of holding SGBs?
- Which bond series are best to buy in 2025?
Key Takeaways
| Feature | SGB | Gold ETF | Physical Gold |
|---|---|---|---|
| Minimum Investment | 1 gram | 1 unit | Varies |
| Interest Income | 2.5% p.a. | None | None |
| Tax on Maturity | Nil | 12.5% | 12.5% |
| Expense Ratio | None | 0.5% | None |
| Liquidity | Moderate | High | High |
| Ideal Tenure | 8 years | Flexible | Flexible |
Why are investors rushing to buy Sovereign Gold Bonds in the secondary market now?
Because new bonds stopped in 2024, and existing ones offer tax-free capital gains and 2.5% annual interest, making them rare and valuable.
In October 2024, the government paused new SGB issuances after incurring losses of over ₹1 lakh crore. Since then, investors have only one way to buy — through the secondary market (like NSE or BSE).
On October 17th, 2025, for example:
- Gold price (10g): ₹132,000
- SGB (2028 series): ₹140,500
That’s nearly a 6% premium — and yet, buyers lined up. Why? Because SGBs combine safety, interest income, and tax-free maturity — a trio no other gold investment offers.
How to buy Sovereign Gold Bonds in the secondary market?
Use your demat account to search for “SGB” or “Gold Bonds,” then buy like a stock.
Here’s the step-by-step guide:
- Login to your demat account (Zerodha, Groww, Angel One, etc.).
- Go to watchlist/search and type “SGB” or “Gold Bond.”
- You’ll see listings like SGBNOV28 or SGBSEP30 — these indicate issue and maturity dates.
- Check:
- Issue price and maturity date
- Remaining years till maturity
- Interest rate (2.5% annually, paid semi-annually)
- Buy at or near market price (look for low bid-ask spreads).
- Hold them till maturity (8 years total) to get tax-free capital gains and regular interest payouts.
Tip: Always verify the “series” before buying. Example — SGBNOV28 Series I matures in November 2028.
Why do Sovereign Gold Bonds trade at a premium to gold and ETFs?
Because they give extra income (2.5% yearly) and zero capital gains tax, unlike ETFs or physical gold.
Even when spot gold is ₹63,000 per 10g, SGBs might trade near ₹66,000–₹67,000. That’s not irrational — it reflects their added value:
- 2.5% annual interest (on issue price)
- No GST, no making charges
- No expense ratio (unlike ETFs)
- Capital gains exemption after 8 years
These advantages justify the 4–8% trading premium.
Comparison Table: SGB vs Other Gold Investments
| Investment Type | Initial Cost | Annual Cost/Expense | Interest Income | Tax on Gains | Liquidity | Ideal for |
|---|---|---|---|---|---|---|
| Physical Gold | +3% GST & making | None | None | 12.5% | High | Jewelry/Tradition |
| Gold ETF | None | 0.5% expense ratio | None | 12.5% | High | Short-term traders |
| Gold Mutual Fund | None | 0.5–1% expense ratio | None | 12.5% | Moderate | SIP investors |
| Sovereign Gold Bond | None | None | 2.5% p.a. | 0% if held 8 yrs | Low | Long-term investors |
What returns can you expect from SGBs compared to ETFs or physical gold?
SGBs deliver around 80% total return over 5 years, outperforming ETFs and physical gold.
Let’s break it down using a ₹1,00,000 investment example with 12% annual gold price growth.
| Investment Type | 5-Year Value | Deduction (tax/charges) | Final Return | Effective CAGR |
|---|---|---|---|---|
| Physical Gold | ₹1,61,000 | -₹12,000 (charges) | ₹1,49,000 | 8.3% |
| Gold ETF | ₹1,62,000 | -₹8,000 (expense ratio) | ₹1,54,000 | 9.0% |
| SGB | ₹1,80,000 | -₹6,000 (interest tax @30%) | ₹1,74,000 | 11.8% |
Even after tax on interest, SGBs win — thanks to tax-free capital gains and no recurring charges.
Gold vs SGB Value Trend (2021–2026 Projection)
| Year | Gold Price (₹/10g) | SGB Value (₹) |
|---|---|---|
| 2021 | 47,000 | 47,000 |
| 2022 | 50,000 | 51,250 |
| 2023 | 55,000 | 57,100 |
| 2024 | 60,000 | 63,000 |
| 2025 | 63,000 | 66,500 |
| 2026 | 68,000 | 72,000 |
Insight: SGBs grow slightly faster than gold prices due to interest income.
Are Sovereign Gold Bonds tax-free and safe for beginners?
Yes — if held till maturity, your capital gains are 100% tax-exempt.
Here’s how SGB taxation works:
- Interest (2.5% per year): Taxable as income.
- Capital Gains (after 8 years): Fully tax-free.
- If sold before maturity: LTCG with indexation applies (20% with benefits).
For new investors, this means — no need to worry about yearly expense ratios or hidden costs. Just buy, hold, and enjoy steady returns.
What are the risks and liquidity issues in the SGB secondary market?
Liquidity is limited — prices fluctuate based on demand and supply.
SGBs trade only during stock market hours (9:15 AM–3:30 PM). Prices may differ ₹100–₹200 per gram depending on buyer interest.
Challenges:
- Low trading volume
- Wider bid-ask spreads
- Difficult to sell during market panic
Opportunity:
If you’re patient, you can buy discounted SGBs when others sell in panic. Long-term holders get rewarded.
Tip: Treat SGBs like an 8-year FD — not a short-term trade.
Which Sovereign Gold Bond series are best to buy in 2025?
Look for bonds maturing between 2028–2030 — they balance returns and liquidity.
| Bond Series | Maturity Year | Premium Range | Ideal For |
|---|---|---|---|
| SGB2028 | 2028 | 5–6% | Medium-term investors |
| SGB2029 | 2029 | 3–5% | Balanced return seekers |
| SGB2030 | 2030 | 2–3% | Long-term holders |
Bonds issued at higher gold prices offer slightly higher interest payouts — check each series carefully before buying.
Should you invest in SGBs now or wait for a correction?
Invest gradually; waiting for perfect timing rarely works.
Gold prices may correct, but SGBs are long-term instruments. The goal is to accumulate slowly, not speculate.
- Keep gold to about 10% of your total portfolio.
- Focus more on equities for growth and liquidity.
- Use SGBs purely for wealth preservation and inflation hedge.
Conclusion: Why SGBs Still Shine in 2025
Despite liquidity issues, SGBs remain India’s best long-term gold investment — combining tax-free maturity, 2.5% annual interest, and zero storage cost.
If you understand how to buy sovereign gold bonds in secondary market, you already hold an edge. Just stay patient, choose the right series, and hold till maturity.
In short: Gold gives safety — but SGBs give smart safety.
Final Word:
If you’re thinking about how to buy sovereign gold bonds in secondary market, focus on patience and planning. Choose a trusted broker, compare bond series, and invest gradually. Over time, your gold investment will not just shine — it will earn interest while you sleep.
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Disclaimer:
This article is for informational purposes only and not financial advice. Please do your own research or consult a financial advisor before investing
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