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Compare net post-tax returns, 2.5% annual interest, GST friction, and capital gains tax across SGB, Gold ETF, and Digital Gold
Top Winner: Sovereign Gold Bond (SGB) ⭐
₹2.28 L
Total return: +128.12% (includes 2.5% p.a. interest payouts + 0% tax at maturity).
| Comparison Metric | Sovereign Gold Bond (SGB) | Gold ETF | Digital Gold |
|---|---|---|---|
| Initial Investment | ₹1.00 L | ₹1.00 L | ₹1.00 L |
| Upfront Costs / Friction | ₹0 (0% GST / Spread) | Brokerage (~0.1%) | ₹6,000 (3% GST + 3% Spread) |
| Pre-Tax Gross Value | ₹2.14 L | ₹2.07 L | ₹2.01 L |
| Annual Interest Payouts | +₹20,000 (2.5% p.a.) | None (0%) | None (0%) |
| Expense Ratio / Management Fee | 0% p.a. | ~0.5% p.a. (₹7,672) | Stored in vault free (up to 5 yrs) |
| Capital Gains Tax Paid | ₹0 (Tax Exempt u/s 47(viib)) | ₹0 | ₹13,195 |
| Net Post-Tax Maturity Value | ₹2.28 L | ₹2.07 L | ₹1.88 L |
| Total Net Return (%) | +128.12% | +106.69% | +88.3% |
Sovereign Gold Bonds (SGB) outperform Gold ETFs and Digital Gold because SGBs pay 2.5% p.a. extra interest and enjoy 100% tax-free maturity status under Section 47(viib) when held till 8 years.
Sovereign Gold Bonds (SGB) issued by the Reserve Bank of India (RBI) are the most tax-efficient way to invest in gold in India:
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