SGB vs Gold ETF vs Digital Gold Tax Calculator 2026

Compare net post-tax returns, 2.5% annual interest, GST friction, and capital gains tax across SGB, Gold ETF, and Digital Gold

Gold Investment Amount (₹)

₹

Quick Presets:

₹10,000₹50.00 L

Expected Gold Appreciation Rate (CAGR)

1%20%

Holding Period

Yrs

1 Yr10 Yrs

Other taxable income (yearly)

₹

₹0₹5.00 Cr

Tax regime

Top Winner: Sovereign Gold Bond (SGB): ₹2.16 L; Total return after tax: +116.37%.

SGB Interest Received: ₹20,000
Capital Gains Tax: ₹14,870

Net Post-Tax Payout Comparison

1. Sovereign Gold Bond (SGB): ₹2.16 L (+116.37%)
2. Gold ETF / Gold Mutual Fund: ₹1.93 L (+92.82%)
3. Digital Gold: ₹1.88 L (+88.3%)

Side-by-Side Product Comparison Table

Show as

Initial Investment
Sovereign Gold Bond (SGB)
₹1.00 L
Gold ETF
₹1.00 L
Digital Gold
₹1.00 L
Upfront Costs / Friction
Sovereign Gold Bond (SGB)
₹0 (0% GST / Spread)
Gold ETF
Brokerage (~0.1%)
Digital Gold
₹6,000 (3% GST + 3% Spread)
Pre-Tax Gross Value
Sovereign Gold Bond (SGB)
₹2.14 L
Gold ETF
₹2.07 L
Digital Gold
₹2.01 L
Annual Interest Payouts
Sovereign Gold Bond (SGB)
+₹20,000 (2.5% p.a.)
Gold ETF
None (0%)
Digital Gold
None (0%)
Expense Ratio / Management Fee
Sovereign Gold Bond (SGB)
0% p.a.
Gold ETF
~0.5% p.a. (₹7,672)
Digital Gold
Stored in vault free (up to 5 yrs)
Capital Gains Tax Paid
Sovereign Gold Bond (SGB)
₹14,870
Gold ETF
₹13,870
Digital Gold
₹13,200
Net Post-Tax Maturity Value
Sovereign Gold Bond (SGB)
₹2.16 L
Gold ETF
₹1.93 L
Digital Gold
₹1.88 L
Total Net Return (%)
Sovereign Gold Bond (SGB)
+116.37%
Gold ETF
+92.82%
Digital Gold
+88.3%

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	₹14,870	₹13,870	₹13,200
Net Post-Tax Maturity Value	₹2.16 L	₹1.93 L	₹1.88 L
Total Net Return (%)	+116.37%	+92.82%	+88.3%

Visual Comparison: Net Payout vs Total Tax Paid

SGB vs ETF vs Digital Gold Formula & Live Calculation

Standard Formula

SGB Net Value = Gold Value + 2.5% p.a. Interest − Slab Tax on Interest − Capital Gains Tax

Live Calculation (Plugging Your Values)

Initial Gold Investment (P):₹1.00 L

Expected Gold CAGR (g):10% p.a.

Holding Tenure (n):8 Years

SGB Total Sovereign Interest (I):₹20,000

Slab tax on SGB interest (T):₹3,120

SGB capital gains tax (C):₹14,870

Digital Gold Friction (3% GST + Spread) (G):₹6,000

Substituted Equation:

Net SGB Value = ₹2.14 L + ₹20,000 − ₹3,120 − ₹14,870 = ₹2.16 L

Net Extra Gold Wealth from SGB vs ETF:₹23,552

Sovereign Gold Bonds (SGB) can beat Gold ETFs and Digital Gold because they pay 2.5% p.a. interest on top of the gold price, and the gain at maturity is tax-free for an individual who bought at issue and held to maturity (Section 70(1)(x) of the Income-tax Act, 2025). Tax is worked out on top of the other income you enter, under the regime you pick: each year's interest at your slab rate, a long-term gain at 12.5% with no ₹1.25 lakh exemption, a short-term gain at your slab rate, with the Section 87A rebate, any surcharge and 4% cess.

Why Sovereign Gold Bonds (SGB) Outperform

Sovereign Gold Bonds (SGB) issued by the Reserve Bank of India (RBI) are the most tax-efficient way to invest in gold in India:

2.5% Annual Interest: Paid semi-annually on initial investment amount over and above gold price appreciation.
Tax-free maturity, for original holders only: The capital gain at maturity is exempt under Section 70(1)(x) of the Income-tax Act, 2025 only if you bought the bond at issue and held it to maturity. Bought on the exchange or redeemed early, the gain is taxed.
Zero Storage & Friction Costs: No GST, no locker fees, and no buy-sell spread (unlike Digital Gold which loses 3% GST + 3% spread on day 1).
Gold ETF Taxation: Gold ETFs held over 12 months are taxed at 12.5% long-term capital gains, with no ₹1.25 lakh exemption (that applies only to equity).

References

How these numbers are checked →

Frequently Asked Questions — Gold Investment Comparison

Why are Sovereign Gold Bonds better than gold ETFs and digital gold?

SGBs pay 2.5% a year in interest on top of gold price movement and carry no GST or storage cost. If you bought the bond from the RBI when it was issued and hold it to the 8-year maturity, the capital gain is also tax-free. Gold ETFs and digital gold offer none of these — they track the price and nothing more.

How is each gold investment taxed in India?

SGB bought at issue and held to maturity: the capital gain is exempt, but the 2.5% interest is taxable at your slab rate. SGB bought on the stock exchange, or redeemed or sold before maturity, and gold ETFs: the gain is taxed at your slab rate if held 12 months or less, and at 12.5% after that. Digital gold: slab rate up to 24 months and 12.5% after, plus 3% GST on purchase that you never recover. None of these gets the ₹1.25 lakh exemption, which applies only to equity shares and equity funds.

Is an SGB tax-free at maturity if I bought it on the stock exchange?

No. From 1 April 2026 the exemption covers only an individual who held the bond from its original issue until maturity (Section 70(1)(x) of the Income-tax Act, 2025, as amended by the Finance Act, 2026). If you bought it on NSE or BSE, the gain at maturity is taxed as a long-term capital gain at 12.5%, without indexation. The same applies when you redeem early with the RBI from the fifth year. This calculator assumes a bond bought on the exchange.

What is the catch with Sovereign Gold Bonds?

Liquidity. The 8-year tenure has an exit window only from year 5, and secondary-market SGBs on the exchanges often trade thin and at a discount. The Government also stopped fresh issues, so new units are available only on the secondary market.

Since fresh SGB issues have stopped, how do I buy one now?

Only on the secondary market. All Sovereign Gold Bond series are listed on NSE and BSE and can be bought through any demat account like a share, settled T+1. Liquidity is thin, so use limit orders and check the traded price against the day's gold rate — older series sometimes trade at a discount to the underlying gold value. Note that a bond bought on the exchange still pays you the 2.5% interest, but only on the original issue price, not on what you paid.

Is the 2.5% SGB interest paid half-yearly, and is TDS deducted?

It is credited half-yearly to your registered bank account, on the issue anniversary and six months after. On a bond issued at Rs 6,000 a gram, one unit pays Rs 150 a year, that is Rs 75 every six months. No TDS is deducted on SGB interest, but it is fully taxable as income from other sources at your slab rate and you must report it yourself. Only the capital gain at maturity is exempt, and only for a bond held from its original issue — never the interest.

When can I redeem an SGB before the full eight years?

The RBI allows premature redemption from the fifth year, on the interest payment dates only. You apply through the bank, post office or agent at least 30 days before the coupon date, and the price is the average of the closing gold rate of the previous three business days published by IBJA. From 1 April 2026 the capital gains exemption needs the bond to be held from original issue until maturity, so a gain on early redemption is taxable, at 12.5% as a long-term gain.

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