Sovereign Gold Bonds 2024, SGB Series-IV: Friday (February 16, 2024) was the last day to invest in Sovereign Gold Bonds 2024, SGB Series-IV. Sovereign Gold Bonds (SGBs) are popular among investors who don’t want to purchase gold in its physical form or want it in both forms. Since bonds are issued by the Reserve Bank of India (RBI) and made available through banks, financial institutions, and post offices, people buy SGBs as they find them a reliable investment option. Through SGBs, the government provides 99.9 per cent pure gold of 24 carats in the form of bonds. In SGB Series-IV, the rate of gold was kept at Rs 6,263 per gramme.  

While physical gold that you purchase today is sold at the ongoing market price, SGBs provide an extra advantage of 2.5 per cent annual interest on your investment. 

The maturity period of a SGB is eight years, and you sell the bond at gold’s ongoing market rate as decided by the government. 

So, one gets interest plus redemption on an SGB investment. 

But like most types of income, earnings from SGBs are also taxed. 

Do you know how?

Do you pay tax only on interest, or are capital gains at the time of bond maturity also taxed? 

Do you also have to pay TDS on your earnings? Know what RBI rules say about the tax on SGBs. 

Sovereign Gold Bonds 2024, SGB Series-IV: Tax implications on interest 

As per the RBI, interest on SGBs will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). 

It means you will be taxed as per your tax slabs, and there will be no tax exemption on interest earnings.

Sovereign Gold Bonds 2024, SGB Series-IV: Tax implications on capital gains 

Unlike tax on interest earnings from SGBs, capital gains tax arising on the redemption of SGBs to an individual has been exempt.

As per the RBI rule, indexation benefits will be provided to long-term capital gains arising to any person on the transfer of a SGB.

Sovereign Gold Bonds 2024, SGB Series-IV: Is TDS applicable on the bond?

TDS is not applicable on the bond, as per the RBI. 

However, it is the responsibility of the bondholder to comply with the tax laws.