Sovereign Gold Bond calculator: Sovereign Gold Bonds are government-backed securities denominated in grams of gold. The Reserve Bank of India (RBI) issues SGBs on behalf of the government. SGBs, introduced in Union Budget 2015-16, are linked to the market price of gold and are considered substitutes for holding physical gold (999 purity).

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SGBs are sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and exchanges (NSE and BSE). SGBs are denominated in multiples of gram(s) of gold. One unit is equivalent to 1 gram of gold.

Any Indian national can buy the bonds by paying the issue price in cash. These bonds are redeemed in cash on maturity. SGBs come with a maturity period of eight years. However, an investor can exit after five years.

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The government also gives a fixed rate of interest of 2.50 per cent annually on the investment amount till maturity (8 years). The interest is paid twice a year in cash. The interest amount is credited into the bank accounts of the subscribers directly. The interest earned is taxable as per the provisions of the Income Tax Act, 1961.

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Sovereign Gold Bond Interest Calculator

For instance, an investor 'A' buys 1 unit/gm of SGB for Rs 5600. The government will pay him/her an interest of 2.50 per cent yearly for the next 8 years on the nominal value.

Accordingly, investor A is entitled to receive Rs 140 per annum.  

2.5 per cent of Rs 5600 = Rs 140 (interest)

It has to be noted that this amount will be paid semi-annually i.e., Rs 70 will be paid twice a year.

In 8 years, investor A will earn an interest of Rs 1,120 (Rs 140 x 8 years = Rs 1,120).

SGBs are redeemed in cash on maturity. Since SGBs are linked to the market price gold, investors get the prevailing market price of gold on maturity.

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