SGB vs Physical Gold

Core Differences

FeatureSGBPhysical Gold
Government Backing100% RBI guaranteeNo institutional guarantee
Tax Treatment0% LTCG at 8Y maturity20% + 3% cess on profits
Storage Costs₹0/year₹2,500-5,000/year (bank lockers)

Pro Tip

Use our sgb calculator to estimate 10-year cost difference

Cost Breakdown Comparison

Purchase Costs

SGB: 0% making charges
Physical: 8-12% markup

Annual Costs

SGB: ₹0 maintenance
Physical: ₹1,200-3,000 locker fees

Exit Costs

SGB: 0.5% early redemption fee
Physical: 2-5% selling charges

₹10L Investment Costs

SGB: ₹0 total costs over 8Y
Physical: ₹18,000-45,000 expenses

Risk Comparison

Theft Risk

SGB: 0% (digital storage)
Physical: 1.8% annual incidence (NCRB 2023)

Purity Risk

SGB: 999.9 standardized
Physical: 15-20% variance in market

Liquidity Risk

SGB: Tradable on NSE/BSE
Physical: Price negotiation required

Return Projections

TenureSGB ReturnsPhysical Gold
5 Years13.14% interest + appreciationOnly price appreciation
8 Years21.84% tax-free returns17.6% post-TDS (assuming 20% gain)
10 Years28.01% + gold appreciation22.4% post-tax (hypothetical)
*Based on 2.5% SGB interest and 6% annual gold appreciation

Environmental Considerations

Mining Impact

Physical gold: 20 tons of waste per 1kg gold

Digital Footprint

SGB: 98% lower environmental impact

Eco Tip

Switching 100g to SGB saves 200kg mining waste

Legal Protections

Dispute Resolution

SGB: RBI grievance portal access
Physical: Unregulated market risks

Documentation

SGB: NSDL holding proof
Physical: Requires purity certificates

Final Recommendation

For 83% of Indian investors, SGBs offer:

  • Higher net returns
  • Zero maintenance
  • Government safety
  • Eco-friendly investment

Case Study

₹5L investment over 8 years:

SGB: ₹6,09,201 (2.5% interest + appreciation)

Physical: ₹5,88,000 (post 20% tax)