Sovereign Gold Bond Calculator India
Calculate Sovereign Gold Bond (SGB) returns, interest, and maturity value for primary and secondary market investments.
SGB Return Calculator for Primary and Secondary Market Investments
The Sovereign Gold Bond (SGB) Calculator helps investors estimate returns from Sovereign Gold Bonds issued by the Reserve Bank of India (RBI). By using this calculator, you can easily calculate interest earned, maturity value, and total returns based on gold prices, investment amount, and holding period. This tool is especially useful for investors who want to compare SGB returns with physical gold, gold ETFs, or digital gold.
Whether you are investing in the primary market (new issues) or purchasing existing bonds in the secondary market, this calculator provides accurate estimates to help you make informed investment decisions.
How does the SGB Return Calculator Work?
The tool uses the standard formula for simple interest (not compound), since SGBs pay 2.5% interest every year, credited twice annually.
The key inputs required are:
- Amount Invested or Purchase Price (₹): The total amount you invest in SGBs or the price at which you buy existing bonds.
- Years Held: The duration for which you plan to hold the SGBs.
- Annual Interest Rate (%): The fixed interest rate offered on SGBs (currently 2.5% per annum).
Using these inputs, the calculator computes the annual interest, total interest earned over the holding period, and the maturity amount (principal + interest).
Maturity value also depends on the prevailing gold prices at the time of redemption, which can be compared separately.
SGB vs Physical Gold vs Gold ETF
| Features | SGB | Physical Gold | Gold ETF |
|---|---|---|---|
| Interest Income | Fixed 2.5% interest | No interest | No interest |
| Safety | Government-backed, low risk | Risk of theft, storage costs | Subject to market risks, no physical holding |
| Liquidity | Tradable on stock exchanges, but with limited liquidity | Highly liquid, can be sold anytime | Highly liquid, traded on stock exchanges |
| Tax on Maturity | Tax-free | Taxable | Taxable |
Example: Sovereign Gold Bond Return Calculation
Suppose you invest ₹50,000 in a Sovereign Gold Bond at an annual interest rate of 2.5% for a holding period of 5 years.
- Principal Amount = ₹50,000
- Issue Price: ₹5,000 per gram (10 grams purchased)
- Annual Interest = ₹50,000 × (2.5 ÷ 100) = ₹1,250
- Total Interest over 5 years = ₹1,250 × 5 = ₹6,250
- Expected Gold Price at Maturity: ₹7,000 per gram
- Maturity Value of Gold = 10 grams × ₹7,000 = ₹70,000
- Total Returns = Maturity Value of Gold + Total Interest = ₹70,000 + ₹6,250 = ₹76,250
Frequently Asked Questions (FAQs)
What is a Sovereign Gold Bond (SGB)?
A Sovereign Gold Bond (SGB) is a government security denominated in grams of gold. It is issued by the Reserve Bank of India (RBI) on behalf of the Government of India as an alternative to physical gold investment.
Is the Sovereign Gold Bond (SGB) calculator free to use?
Yes, this Sovereign Gold Bond calculator is completely free to use. You can calculate SGB returns, interest, maturity value, without any charges or subscriptions.
How is interest calculated on Sovereign Gold Bonds?
Interest on Sovereign Gold Bonds is calculated at a fixed rate of 2.5% per annum on the initial investment amount. The interest is paid semi-annually and does not depend on gold price changes.
Is SGB interest simple or compound?
SGB interest is calculated using simple interest. The 2.5% annual interest is applied only to the original investment amount, not on accumulated interest.
Does this SGB calculator work for both primary and secondary market investments?
Yes, this SGB calculator can be used for both primary market RBI issues and secondary market purchases from stock exchanges by adjusting the purchase price and holding period.
Is capital gain tax-free on SGB maturity?
Yes, capital gains earned on Sovereign Gold Bonds are tax-free for individual investors if the bonds are held until maturity. However, interest income is taxable as per your income tax slab.
Can I sell Sovereign Gold Bonds before maturity?
Yes, Sovereign Gold Bonds can be sold after 5 years through RBI exit windows or anytime before maturity on the stock exchange via the secondary market.
Is Sovereign Gold Bond better than physical gold?
Sovereign Gold Bonds are generally better than physical gold because they offer additional interest income, tax benefits on maturity, and eliminate storage and theft risks.