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Sovereign Gold Bonds (SGBs) have long been considered one of the safest and most rewarding ways to invest in gold. Backed by the Government of India, these bonds offered investors the dual advantage of earning a fixed 2.5% annual interest along with the potential upside of rising gold prices. However, after February 2024, the government discontinued issuing new SGB series due to rising fiscal pressures.

Even though fresh tranches are no longer available, investors continue to show keen interest by turning to the secondary market. Here’s a detailed guide on how to buy SGBs through stock exchanges, along with the advantages, drawbacks, tax rules, and expert recommendations.

How to Buy SGBs Through the Secondary Market

Buying SGBs today is as simple as purchasing a stock from your trading app. Investors can use platforms such as Zerodha, Groww, Upstox, or any other brokerage that allows bond trading.

Step-by-step process:

1. Open your trading app and search for “SGB” in the search bar.

2. Check the series name and maturity year carefully. Each bond has a specific maturity date, typically eight years from the original issue.

3. Review market price and liquidity. Some older SGB series have very low trading volumes. This can lead to large bid–ask spreads, meaning the buying and selling prices may fluctuate significantly.

4. Place a limit order instead of a market order. Because prices can swing quickly, a limit order ensures you buy at your chosen price rather than paying unexpectedly high rates.

5. Once the purchase is completed, the units are credited to your demat account, and the 2.5% annual interest begins to be credited directly to your bank account.

One major highlight is that even SGBs bought from the secondary market remain eligible for tax-free capital gains at maturity, provided redemption is done through the RBI.

Is Buying SGBs From the Secondary Market Worth It?

According to Amar Ranu of Anand Rathi Shares & Stock Brokers, buying SGBs from the secondary market can be a smart move—but only when the premium over the gold price is reasonable.
If the premium is too high, the effective returns can shrink when compared to gold ETFs or physical gold.

SGB vs. Gold ETF: Which One Offers Better Value?

Experts hold different views depending on an investor’s objectives.

Experts say:

• For long-term investors:
  SGBs are considered more rewarding because they offer tax-free capital gains at maturity and guaranteed annual interest.

• For short-term or frequent traders:
  Gold ETFs are more suitable because they are highly liquid, easy to buy and sell, and come with lower implicit costs.

Ravi Singh of Master Capital Services notes that while SGBs provide attractive long-term benefits, liquidity can be a constraint for investors who may need quick access to funds. Gold ETFs, on the other hand, offer greater flexibility and smoother trading, making them ideal for short-term strategies.

Tax Rules for SGBs Bought on the Secondary Market

Taxation remains one of the biggest advantages of Sovereign Gold Bonds—but only under certain conditions.

Key tax highlights:

• Tax-free capital gains apply only if the bond is held until maturity and redeemed through the RBI.

• Selling SGBs on an exchange (before maturity) makes them subject to capital gains tax—similar to gold ETFs.

• Investments held for more than 24 months qualify as long-term capital assets, taxed at 12.5% without indexation (on investments sold after July 23, 2024).

• Investments sold within 24 months fall under short-term capital gains, taxable according to the investor’s income tax slab.

Thus, the biggest tax benefit—complete exemption—comes only when investors stay invested until maturity.

What Are Sovereign Gold Bonds? A Quick Recap

Sovereign Gold Bonds were introduced as a secure way to invest in digital gold without the risks of theft, impurities, or storage costs.
They track the market price of gold and provide an additional 2.5% annual interest, making them more profitable than many other gold investment options.

Even though no new series are being issued, many older SGBs are still available on the secondary market—sometimes at discounted prices. This continues to attract investors looking for a tax-efficient, low-risk gold investment avenue.