Sovereign Gold Bond (SGB) Tracker

NRI Guide to Sovereign Gold Bonds — 2025 Complete Overview

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. Issued by the Reserve Bank of India on behalf of the Government of India, they offer a unique combination of gold price exposure plus 2.5% annual interest — and historically no capital gains tax on maturity. For resident Indians, they have been one of the most tax-efficient ways to invest in gold. For NRIs, the rules changed materially in 2023.

The April 2023 rule change: what changed for NRIs

Until March 2023, NRIs could subscribe to SGB primary issues just like resident Indians — during each tranche window announced by RBI, NRIs could apply through their NRE or NRO accounts. In April 2023, FEMA (Foreign Exchange Management Act) regulations were tightened and RBI clarified that new SGB subscriptions are restricted to resident individuals only. Existing SGB holders (NRIs who subscribed before this change) can continue to hold their bonds and receive interest normally until maturity. But no new primary subscriptions are allowed.

Additionally, RBI suspended new SGB issuances entirely by early 2024 as part of the government's fiscal consolidation — so even resident Indians cannot subscribe to new tranches as of 2025. This makes the secondary market the only route for anyone wanting to invest in SGBs now.

Secondary market SGBs: how NRIs can buy

SGBs issued by RBI are listed and traded on the NSE and BSE. NRIs can buy them on the secondary market during normal trading hours through their demat-linked trading account. Key things to know:

Liquidity: SGB secondary market liquidity is thin compared to equities. Some series have very few transactions per day. Use limit orders rather than market orders to avoid unfavorable fills. Older series (especially those within 1–2 years of maturity) tend to have better liquidity as investors anticipate the guaranteed RBI redemption.

Premium and discount: SGBs often trade at a slight discount to spot gold price because of lower liquidity. However, series close to maturity may trade closer to or above NAV since the guaranteed RBI redemption at gold price creates a floor. The 2.5% annual interest accruing adds additional value above the raw gold price.

Broker requirements: NRIs need an NRI demat account. US and Canada NRIs are limited to ICICI Direct for secondary market SGB purchases (only FATCA-compliant broker). All other NRIs (Europe, GCC, Singapore, Australia, etc.) can use Zerodha, Groww NRI, ICICI Direct, or HDFC Securities.

SGB vs Gold ETF for NRIs

For NRIs who want gold exposure in their India portfolio, the two main options are SGBs (secondary market) and Gold ETFs. SGBs offer the 2.5% annual interest bonus and tax-free maturity proceeds — but have thin liquidity and are not reissuable. Gold ETFs (like Nippon India Gold BeES, HDFC Gold ETF) are highly liquid, can be bought in small quantities, but attract standard capital gains tax. For a buy-and-hold NRI with a 3–5 year horizon and patience with thin markets, secondary market SGBs are generally more tax-efficient. For an NRI who wants to trade in and out of gold exposure, Gold ETFs are more practical.

Tax treatment in detail

At maturity (held to 8 years): Capital gains are completely exempt under Section 47(viic) of the Income Tax Act for individual investors. This is the most significant tax benefit of SGBs — no tax on what could be substantial capital appreciation over 8 years.

Premature exit via secondary market: If you sell the SGB on the exchange before maturity, capital gains tax applies. Gains held more than 36 months (long-term) are taxed at 12.5% with no indexation benefit (post-Budget 2024 changes). Short-term gains are taxed at applicable income slab rates.

Interest income: The 2.5% semi-annual interest is taxable as income from other sources at slab rate. No TDS if held in demat form. For NRIs in DTAA countries, interest may also be taxable in the host country — claim foreign tax credit via Form 67 in India.

Repatriation: Proceeds from an NRE-account-funded SGB purchase are fully repatriable. From NRO: subject to USD 1M annual cap with Form 15CA/15CB documentation above ₹5 lakh.