Sovereign Gold bonds Tax and the secondary market

Bonds
1

Hello there,

I have a few questions regarding SGBs. I will list them below along with scenarios to get a better understanding.

Can I buy SGBs from the exchange or the Secondary market and hold Them for 8 years or more?

The current month is April 2021 and missed the windows to buy the SGBs from the RBI issue. I can hold it for 8 years or more. But when I go to Zerodha the farthest date I see is SGBMAR29, which is one month short of 8 years.

So can I buy SGBs from the exchange or the Secondary market and hold Them for 8 years or more?

Tax on SGBs after 5 years.

Let’s say I buy SGBs from the exchange and I can hold it for 5 years. I understand that the 2.5% interest will be taxed, but if I sell after 5 years will I be taxed for LTCG?

If I wait and buy from RBI in the next series and then hold for 5 years, will that be taxed for LTCG?

Thanks

2

The maturity period is calculated from date of issuance, not from the date you purchase in secondary market.

You can buy SGB from secondary market and hold until maturity.

@Quicko recently published this post on Taxation on SGB, you can check this out: Taxation on Sovereign Gold Bonds (SGBs) in India

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3

Thank you for the reply.

I have a follow-up question.

Let’s say that I buy SGB from the secondary market and hold it till maturity. So let’s say that I buy a bond that matures in two years will that be taxed for me.
The bond has matured but I only held it for two years.

Or I have to hold the bond for 8 years for it tobe tax-free?

Thanks

4

As long as redeem the SGB with RBI, there is no capital gains tax…

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5

I will recommend for next RBI tranche of SGB since the ones available in secondary markets are expensive…

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