1. What are sovereign gold bonds (sgbs)?
Sgbs are government-backed investment instruments launched in 2015, allowing investors to own gold in paper form rather than physical gold. Key features include:

  • Annual interest: 2.5% on the initial investment
  • Gold price appreciation: value linked to market gold prices
  • Safe investment: issued by the government of india, eliminating storage and purity concerns

2. Do you need to declare sgbs in itr?
Yes, sgb investments and returns must be reflected in your income tax return (itr), but the treatment depends on capital gains and interest earned:

  • Interest income: taxable under “income from other sources”
  • Capital gains: tax rules differ based on whether you sell before or after maturity

3. Taxation on capital gains

  • Redemption after maturity (8 years):
    • Long-term capital gains on sgbs are exempt from tax
  • Selling in secondary market before maturity:
    • Short-term capital gains (if held ≤3 years) taxed as per applicable income tax slab
    • Long-term capital gains (if held >3 years) tax-free

4. Reporting in itr

  • Include interest earned as part of your total income under ‘other sources’
  • For capital gains:
    • Report gains/losses if sold in the secondary market
    • Gains exempt after maturity do not require reporting, but disclosure is recommended for clarity

5. Benefits of investing in sgbs

  • Dual benefit: gold price appreciation + 2.5% annual interest
  • No storage issues: wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital form instead of physical gold
  • Capital gains exemption: encourages long-term investment
  • Government-backed: safe from theft and fraud

6. How to include sgbs in your itr

Collect interest certificates from your bank or rbi

Check redemption or sale date for capital gains computation

Include interest income under other sources

Report capital gains if sold before maturity

File the correct itr form (itr-2 or itr-3) depending on income type

7. Conclusion: stay compliant and benefit more
sovereign gold bonds are a secure and profitable investment for long-term wealth creation. While interest earned is taxable, capital gains after maturity are fully exempt. Proper reporting in itr ensures tax compliance, transparency, and peace of mind while enjoying the benefits of gold investment.


Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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Balasahana Suresh

15/09/2025 09:58 AM