SGB vs Digital Gold vs Gold ETF
The same money in gold three ways, after entry costs, annual drag and tax.
- Sovereign Gold Bond (secondary market)No entry cost. 2.5% coupon, taxed at slab. Long-term after 12 months.
- ₹10,04,246.15
- Digital gold₹30,000.00 lost on entry. Long-term after 24 months.
- ₹8,78,191.39
- Gold ETF (listed)₹2,500.00 lost on entry. 0.5% a year. Long-term after 12 months.
- ₹8,98,250.58
There is no new Sovereign Gold Bond issuance. The last tranche was 2023-24 Series IV in February 2024 and the scheme was discontinued in Budget 2025, so the only way in now is the secondary market — which is where the tax change matters. From 1 April 2026, section 70(1)(x) of the Income-tax Act 2025 restricts the capital-gains exemption on redemption to an original subscriber who holds continuously to full maturity. Buying an SGB on the exchange today therefore earns no exemption at maturity, and premature redemption in years 5 to 8 is now taxable too. What the bond still gives you is the 2.5% annual coupon on the nominal value, taxable at your slab rate, and zero holding cost. The figures above assume a secondary-market purchase and tax the gain accordingly. Elsewhere: a listed gold ETF turns long-term at 12 months but an unlisted gold fund-of-funds takes 24, which is the most exploitable difference here and the one most often missed. Gold gets no ₹1.25 lakh exemption in any wrapper. Digital gold carries 3% GST on purchase plus a 2% to 5% buy-sell spread, so the metal has to rise 5% to 7% before you are level.
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How it works
Three wrappers around the same metal, with very different costs and tax treatment. Sovereign Gold Bonds pay a 2.5% annual coupon and cost nothing to hold; gold ETFs charge an expense ratio and carry tracking error; digital gold charges 3% GST on purchase plus a buy-sell spread of 2% to 5%, so the metal must rise 5% to 7% before you are level.
Two things have changed recently and most published comparisons have not caught up. There has been no new SGB issuance since February 2024 and the scheme was discontinued in Budget 2025, so the only way in is the secondary market. And from 1 April 2026 the capital-gains exemption on redemption applies only to an original subscriber who holds continuously to full maturity — so a bond bought on the exchange today earns no exemption, and premature redemption in years 5 to 8 is taxable too.
The gap most often missed is between the two fund wrappers. A listed gold ETF turns long-term at 12 months; an unlisted gold fund-of-funds takes 24. Identical exposure held for twenty months is taxed at 12.5% one way and at your slab rate the other.
Each route: amount less its entry cost, compounded at the gold return less its annual drag, taxed at 12.5% if held beyond that wrapper's long-term threshold and at slab if not, plus any coupon net of slab tax.Gold gets no ₹1.25 lakh annual exemption in any wrapper — that applies only to listed equity and equity funds with STT paid.
Frequently asked questions
Can I still buy a new Sovereign Gold Bond?
No. The last tranche was 2023-24 Series IV in February 2024, and the scheme was discontinued in Budget 2025 with no issuance calendar since. Existing bonds continue to maturity and can be bought and sold on the exchanges, but they are often illiquid there and can trade at a discount to their intrinsic value.
Is the SGB maturity exemption still available?
Only to original subscribers holding to full maturity. From 1 April 2026, section 70(1)(x) of the Income-tax Act 2025 restricts it: someone who bought the bond in the secondary market is taxable on redemption, and premature redemption in years 5 to 8 is taxable as well. Since new issuance has stopped, anyone buying an SGB today is by definition a secondary-market buyer and gets no exemption.
Why does SEBI warn about digital gold?
Because it is not regulated by anyone. SEBI's advisory of 8 November 2025 states that digital or e-gold is not a notified security and not a regulated commodity derivative, and so sits entirely outside SEBI's purview — investors carry counterparty and operational risk with no investor-protection mechanism. SEBI directs investors to gold ETFs, exchange-traded commodity derivatives and electronic gold receipts instead.
Gold ETF or gold fund-of-funds?
The ETF, on tax, if you can hold it in a demat account. A listed ETF turns long-term at 12 months where an unlisted fund-of-funds takes 24, so anything sold between those points is taxed at 12.5% via the ETF and at your slab rate via the fund. The fund-of-funds is more convenient — no demat account, and it accepts SIPs — but it adds a second layer of expense on top of the ETF it holds.