Why I am unable to buy SGB in Zerodha

Thank you very much for the crisp and clear explanation Mr Bhuvanesh. Also for the PS mainly.

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Hello Zerodha Team, am holding Zerodha account. Pls help answering following queries:

  1. Can we trade SGB’s in Secondary market like a Stock trade i.e. Buying & selling same SGB in secondary market.

    a. If yes, would it be possible only after delivery (T+3) or before too?

    b. If not, will I get locked for 5 years / 8 years, until its maturity, after buying it from Secondary market?

  2. Why do we have difference in price for different SGBs lot, when all are Gold. All of them should be at the same price level (Gold price), no matter what price it was bought at from Primary Market?

  3. Why do the price of different SGB’s lot vary differently, when all are gold. Does it also depend on the trading of that SGB. If Yes, what is the meaning of buying SGB from Primary Market if the amount at maturity would be different for different lots? Ideally these are gold & should be same. Pls elaborate.

these may be silly questions, pls help clarifying them. Thank you!

Yes

Yes

No, you can sell on the exchanges anytime

Supply, demand, liquidity issues

Same as above

On redemption its exempt doesn’t matter from where u bought.

On sale before redemption u will have to pay cap gain tax. Though u will get indexation benefit if its held for long term

I’ve recently opened an a/c. How can I check I will be able to invest in SGBs via Zerodha. I have not traded yet. I see two options enabled on my dashboard - Equality, Commodity.

go to zerodha.com/gold when the next issue of SGB happens, check here for the issuance calendar:
Upcoming Sovereign Gold Bond issues

Hello sir,
I have bought SGBAug27 maturity tranche from the secondary market 1 month back. Please clarify my 3 situations below:

  1. If I hold this till maturity, will I be taxed because I purchased from secondary market / did not hold it for a period of 8 yrs?

  2. Supposing if I sell it in secondary market after 1 year, will I be taxed for capital gain?

  3. Suppose I redeem it after 5 years of bond period, will I be taxed?

I too had some doubts regarding SGB, so one user sent me the following link, maybe it can help you.
https://m.rbi.org.in/Scripts/FAQView.aspx?Id=109

Thanks stonecold. But those faq s doesn’t answer my questions. Any info will be of great help. Thanks

Yes, if you make any capital gains you will be taxed but the indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond. In your case if any capital gains those will be taxed accordingly.

Unless you hold from start to maturity , you will be taxed based on short term or long terms, also these are only on profits.

Yes, on your profits, but long term indexation benefits should apply.

Hi @siva

As I understood from https://m.rbi.org.in/Scripts/FAQView.aspx?Id=109, capital gains are exempt from tax if the bonds are redeemed on maturity.

And based on the reply I got here, Selling Sovereign Gold Bonds, gains should remain tax free on maturity even if bought from the secondary market, which seems contradictory to your first answer.

Could you please clarify if gains are tax exempt or taxable at redemption on maturity, if bought from the secondary market?

I don’t think so it will tax free if one buy from secondary market and held till maturity, one can buy 1 year before maturity and can claim right which defeats the whole purpose. Let me try finding it out, you can also check with CA if you know anyone.

Capital gains come into picture only if you ‘transfer’ the bonds which is when you sell them to someone else in secondary market. If you let them mature, it is tax exempt as per that RBI link. So it doesn’t matter whether u buy it from secondary market or directly from Govt, u pay taxes only if you sell it in secondary market…

Hi akshit and Siva,
Pls refer I found in internet.

But not sure as no other site mentions this

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Hi @AJ007, thank you for responding to my query again and clearing up this doubt.

@siva, it does seem like it remains tax free on redemption at maturity even if the bond was bought from the secondary market, with further backing from the link @Vijay_Shankar has helpfully posted. I will try confirming the same with a CA when possible.

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Thanks for clarifying on SGB Taxes Siva, Will I get the interest on the SGB’s bought from Secondary market? Like: I bought SGBAPR28I-GB today, will I be entitled for an annual interest of 2.5% on this SGB unit bought from secondary market? Thanks!

Yes, you will receive directly in to your bank account.

If we buy before 1 year and hold it till maturity, it doesn’t come under the category of LTCG at all.

Thanks @siva, @AJ007 and @akshit for your thoughts. Were anyone of you able to get in touch with any good CA and find out our case? Any credible info will be of big help please.

No, it won’t.