If you have been meaning to add gold to your portfolio and went looking for a Sovereign Gold Bond, you probably noticed something odd: there is not a new one to buy. That is not a glitch. The government quietly stopped issuing SGBs in February 2024, and as of late 2026 there is still no issuance calendar for a fresh tranche — the Finance Minister has said there are no immediate plans to restart the scheme.
A lot of finance content online still recommends SGBs as if you can walk up and buy one. You cannot, not as a new issue. So this guide covers two things: what to do if you already hold SGBs, and — more usefully for most readers — where new gold money should actually go now.
If you already hold SGBs: relax, mostly nothing changes
Discontinuing new issuance does not touch bonds already in your demat account. You still get 2.5% annual interest, paid twice a year, and the bond still matures in full after 8 years with the redemption value tied to gold’s prevailing price. Zero default risk — it is a government security.
You also do not have to wait the full 8 years. RBI opens an early-redemption window on specific interest-payment dates once a bond crosses 5 years, and a wide batch of SGBs issued between 2018-19 and 2021-22 has been going through exactly this window through 2026 — many showing gains well over 100%, some past 200%, purely from the rupee price of gold moving over that period. Check the RBI website for your series’ exact redemption dates rather than guessing.
One change worth knowing about: since 1 April 2026, the long-standing rule that capital gains on SGBs held to maturity are completely tax-free now applies only to the original subscriber — the person who bought it in the actual RBI tranche. If you buy an already-issued SGB later on the stock exchange (secondary market) and hold it to maturity, your capital gains are no longer exempt and attract 12.5% long-term capital gains tax. The semi-annual 2.5% interest was always taxable at your slab rate for everyone, original subscriber or not, and that has not changed.
For new gold money, here are your real options
With SGBs off the table for new investors, four practical routes are left. None of them carries SGB’s old party trick — a government-paid 2.5% interest on top of the gold price — because that was always the specific feature of a bond, not of “gold investing” in general. What is left is just gold, held in different wrappers with different costs and different tax treatment.
| Gold ETF | Gold mutual fund (FoF) | Digital gold | Physical gold | |
|---|---|---|---|---|
| What it is | Exchange-traded fund backed by physical gold, bought like a stock | Mutual fund that invests in a gold ETF for you | App-based grams of gold, stored by the seller | Jewellery, coins, bars |
| Needs a demat account | Yes | No — regular mutual fund folio | No | No |
| Minimum investment | Price of ~1 unit (often under ₹100) | As low as ₹100-500 via SIP | As low as ₹1-10 | Usually a few grams upward |
| Ongoing cost | Low — expense ratio roughly 0.3%-0.7% a year | Slightly higher than the underlying ETF (double layer of fees) | Spread between buy/sell price, no visible “fee” | Making charges (often 8-25%) + wastage — the biggest drag of any option |
| Regulation | SEBI-regulated, exchange-traded | SEBI-regulated mutual fund | Largely unregulated — several platforms have shut down or exited this business | Hallmarking (BIS) helps, but no investment regulator |
| Selling it back | Sell any market day like a stock | Redeem like any mutual fund | Depends entirely on the app staying in business | You lose making charges again on resale |
The honest read: Gold ETFs are the closest practical substitute for what SGBs used to do for most people — low cost, liquid, no storage risk, no making charges. You just do not get the 2.5% bonus interest anymore, because that always came from the government, not from gold itself.
How each option is actually taxed in 2026
This is where a lot of comparison articles get sloppy, so here is the current picture as of 2026 — always double-check before a large transaction, since gold and capital-gains rules have moved more than once in the last two years.
- Gold ETFs: units bought on or after 1 April 2025 need to be held over 12 months to count as long-term. Long-term gains are taxed at a flat 12.5%, with no indexation benefit. Sell within 12 months and the gain is added to your income and taxed at your slab rate.
- Gold mutual funds (fund-of-funds): the long-term threshold is longer — over 24 months to qualify, also taxed at 12.5% flat with no indexation. Anything sold before 24 months is taxed at your slab rate.
- Digital and physical gold: same 24-month rule as gold mutual funds — over 24 months, 12.5% flat; under that, slab rate. Buying digital or physical gold also attracts 3% GST upfront, which you never get back, so you start the investment down 3% before the price of gold has moved at all.
- SGB (existing holdings, original subscriber, held to maturity): still fully tax-free on the capital gain — genuinely the best tax treatment of anything on this list, which is exactly why it is worth holding onto what you already have rather than exiting early out of habit.
- SGB interest, always: taxable at your slab rate, whether you are the original subscriber or bought it later — this part never changes.
Notice the pattern: the shorter holding period for long-term treatment (Gold ETFs, 12 months) makes them a bit more forgiving if your timeline is uncertain, compared to gold mutual funds, digital gold or physical gold, which all ask you to sit for a full 2 years to get the same flat rate.
So what should you actually do?
General principles, not personalised advice for your situation:
- Already holding SGBs? Let them run to maturity if you can. You are sitting on the best tax treatment available and a fixed 2.5% you will not find again in this category. Use the early-exit window only if you genuinely need the money, not because gold has “already run up.”
- Starting fresh and you already have a demat account? A Gold ETF is the simplest, cheapest, most liquid option — buy it like any other stock through your broker.
- No demat account yet, or you would rather do it as a monthly SIP? A gold fund-of-funds through your existing mutual fund platform works fine — you give up a sliver of return to the extra layer of fees, in exchange for convenience.
- Be careful with digital gold for anything beyond small, casual amounts. It is largely unregulated, several platforms have already wound the business down, and you are trusting an app to actually be holding the metal it says it is.
- Buy physical gold for wearing, not for investing. Making charges and resale losses make jewellery one of the worst-performing “investment” vehicles on this list, even when the metal itself does well.
- Keep gold a small slice of the portfolio — most planners suggest somewhere around 5-10% as a diversifier, not as the core of your savings. Gold protects against certain kinds of shocks; it is not a substitute for equity or debt over the long run.
Where to start
Buying a Gold ETF needs a demat and trading account, the same one you would use for stocks — if you do not have one yet, our guide to opening a demat account and our broker comparison are a good place to start. A gold fund-of-funds needs nothing new if you already invest through a mutual fund app or your broker’s platform. Either way, we list the accounts and apps we have actually looked at on our Money Toolkit page.
Affiliate disclosure: some links on this page, including on the Money Toolkit, are affiliate links — if you open an account through them, Finostock may earn a commission at no extra cost to you. We only link to products we would actually use ourselves.
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Disclaimer: Finostock provides general financial education only. We are not a SEBI-registered investment adviser and nothing here is personalised investment advice. Gold prices, GST, and capital-gains tax rules change — verify current rules on the RBI, SEBI or Income Tax Department websites, or with a qualified professional, before acting.
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