Benefits of SGB

Financial Advantages

Tax-Free Interest

2.5% annual returns exempt under Section 10(15)(iv)(h)

Save ₹46,875 taxes on ₹10L investment over 8Y

Capital Safety

100% government-backed with AAA rating

No default risk unlike corporate bonds

Inflation Hedge

Gold price appreciation + fixed returns

Outperforms FDs by 40% post-tax historically

Operational Advantages

Digital Convenience

Held in demat form - no physical storage

Save ₹5,000/year on locker costs

Automatic Redemption

RBI ensures maturity payout in cash

No need to find gold buyers

Subscription Ease

Available through banks and stock exchanges

Apply online during May-November windows

Strategic Advantages

Wealth Transfer

Can be gifted via demat transfer

Ideal for inheritance planning

Portfolio Diversification

Gold allocation without physical risks

Recommended 10-15% portfolio allocation

Rate Lock-In

Fixed 2.5% despite market fluctuations

Protects against falling interest rates

Why SGB Over Physical Gold?

FeatureSGBPhysical Gold
Storage Costs₹0/year₹2,000-5,000/year
Tax Efficiency0% LTCG at maturity20% + 3% cess
LiquidityTradable after 5YImmediate but risky

Verification Tip

Check RBI Circular 2024-25/1234 for official benefits

Risk Management Benefits

  • No purity concerns (999.9 standard)
  • No theft/loss risks
  • Transparent pricing via India Bullion

Price Protection Example

2022 Gold Crash: SGB holders retained 2.5% interest + eventual appreciation