As the price of gold goes up, people who own Sovereign Gold Bonds (SGBs) are thinking differently about what to do with them. Stockbrokers have been saying that more people want to sell their SGBs from the August and September 2024 series. As of today, the price of 10 grams of 24 carat gold is Rs 75,130.
So, if you are willing to sell SGBs to benefit from the Gold price surge, you should also know about the tax implications. Don’t worry we’ve it covered for your in this article. Read on to know how Sovereign Gold bonds are taxed and how you can minimize tax liability as well.
Tax on selling Sovereign Gold Bonds (SGBs)
Let’s understand the taxation of Sovereign Gold Bonds (SGBs) based on different holding periods and redemption scenarios.
| If you sell SGBs before 3 years | Taxed as per slab |
| If you sell SGBs after 3 years | 10% capital gains or 20% with indexation |
| If you sell SGBs after 5 years | 10% capital gains or 20% with indexation |
| Redeemed at maturity | Tax-Free |
Tips to Minimize Tax Liability
When you are willing to sell SGBs, you must be careful of certain tax implications. Here are some tips that will help you to minimize tax liability while selling SGBs.
Keep your SGBs for long-term gains: If you hold them for over three years, you generate long-term capital gains (LTCG), taxed at a lower rate of 20%, reducing your tax liability.
Use indexation: Adjust purchase prices for inflation, potentially reducing taxable profits, especially for long-held SGBs.
Also Read : Why do you need Form 15G and Form 15H?
Consider LTCG Tax Exemption: You can avoid paying tax on Long-term Capital Gains (LTCG) by investing the money from selling your SGBs into certain bonds within six months. This can delay paying tax and earn interest on the new investment.
Plan for TDS: If you sell your SGBs through a bank, they may take out tax from your profit upfront. To avoid paying too much tax, consider submitting Form 15G/15H if your income is below a certain limit.
Talk to a Tax Advisor: Tax rules can be tricky, so it’s a good idea to consult a tax advisor. They can help you understand the tax implications of selling SGBs and come up with a plan to pay less tax.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
