Sold sovereign gold bonds at market highs? Calculate your taxes in this way - Hindustan Times
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Sold sovereign gold bonds at market highs? Calculate your taxes in this way

Apr 18, 2024 07:20 AM IST

Sovereign Gold Bonds: As per the rules, the bond reaches maturity after eight years. In this case, no tax is charged on the increased gold value.

SGBs is an investment in gold in dematerialized form. This is a good way of investing without having to deal with problems like storage and purity. Gold on April 14, 2024, touched 72,500 per 10 grams, making the bids for selling the Sovereign Gold Bonds (SGBs) of August and September 2024 increase tremendously due to the ongoing geo-political tensions, leading people to rethink their gold-selling strategies. 

Sovereign Gold Bonds: As per the rules, the bond reaches maturity after eight years.(Reuters)
Sovereign Gold Bonds: As per the rules, the bond reaches maturity after eight years.(Reuters)

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Here is how the taxation is done:

As per the rules, the bond reaches maturity after eight years. In this case, no tax is charged on the increased gold value, but only the tax on the interest earned would be charged. However, if a person sells their SGBs before the maturity period, the tax is charged on the interest amount as well as the increased gold value. 

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The bi-annually received interest is added to the income and is taxed as per the tax slab one falls under, for instance, if you are in the 30 percent tax bracket, the tax on SGB interest will also be 30 percent for you.

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Although these bonds mature in eight years, there is a five-year option for an early withdrawal by presenting the bonds to the RBI prior to the interest or coupon being paid. Offering the units for redemption at the right time is important, even if the tax would be the same as any early withdrawal after three years. Therefore, give the bank or the bond distribution company 30 days' notice before the interest payment is due.

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