SGBs (Sovereign Gold Bonds) are taxed differently at different stages, including acquisition, interest income, and capital gains.
- Acquisition: When you purchase SGBs, there is no tax on the purchase price.
- Interest Income: In addition to earnings from gold price appreciation, you will receive an extra 2.5% interest every year on the launch price of the bond, payable every 6 months. This interest is taxable as per your income tax slab rate. However, there's no TDS on the Interest amount.
- Redemption: When you redeem or sell the SGBs, the capital gains are calculated based on the selling price minus the acquisition cost.
- If you sell SGBs after holding them for <2Y and before maturity, it is considered a short-term capital gain and is taxed at your applicable income tax slab rate.
- If you sell SGBs after holding them for >=2Y and before maturity, it is considered a long-term capital gain and is taxed at a flat rate of 12.5%.
- If you sell SGBs at maturity, the capital gains are tax-free.