I hold SGBs from two different series bought a few years ago. I keep seeing these SGB calculator tools online but honestly I am not sure which numbers to enter where or what the output actually means. My main confusion is whether the 2.5% interest is on what I paid or on what gold is worth today. Can someone walk me through this?
Good question and a common source of confusion. The 2.5% interest is always calculated on the original issue price at which the bond was issued by the RBI, not on the current gold price and not on whatever price you may have paid in the secondary market. It is simple interest, not compound. So if your bond was issued at Rs 5,000 per gram and you hold 10 grams, your annual interest is 2.5% of Rs 50,000 which is Rs 1,250, regardless of whether gold is now trading at Rs 7,000 or Rs 9,000 per gram. That Rs 1,250 is split into two payments of Rs 625 each, credited every six months to your bank account.
wait so even if gold doubles, my interest stays the same? that’s a bit disappointing lol
The interest stays fixed yes. The upside from gold price movement comes at redemption, not through the coupon. When you redeem at maturity after 8 years, RBI pays you based on the prevailing gold price at that point. Specifically they use the simple average closing price of 999 purity gold published by IBJA for the three business days before your redemption date. So the interest is your fixed predictable income, and the gold price appreciation is your variable upside on top.
okay so what does the calculator actually compute? i’ve opened these tools and they ask for issue price, units, holding period, and target gold price. what does the output tell me?
Most SGB calculators output three or four numbers. Total interest earned over your holding period, which is 2.5% of your issue price multiplied by grams multiplied by years. Estimated maturity value, which is your grams multiplied by whatever gold price you assume at maturity. Total return combining both. And some calculators also show a post-tax estimate based on your slab rate. The key input to get right is the gold price at maturity because that is a guess. Try a few scenarios: pessimistic at flat current price, moderate at 6 to 8% annual appreciation, and optimistic at 10 to 12%, to see the range of outcomes rather than anchoring on one number.
One thing worth knowing if you bought from the secondary market. The interest you receive is still calculated on the original RBI issue price of that series, not on what you personally paid. So if you bought a 2020 series SGB on Zerodha at a premium, say Rs 7,500 per gram, but the original issue price was Rs 5,000, your interest is calculated on Rs 5,000. The calculator will ask for the original issue price for this reason, not your actual purchase price.
arre yaar that’s a trap. so if I bought at a premium I need to check what the original issue price was for that series before entering it into the calculator?
Exactly. Each series has a specific original issue price. Most calculator sites have a dropdown where you select the series name and it auto-fills the issue price for you. Worth double-checking before running any numbers.
Tax note before anyone gets excited about the returns. The 2.5% interest is taxable at your income tax slab rate every year as income from other sources. No TDS is deducted but you need to report it in your ITR. On capital gains: only original subscribers who hold till maturity get full exemption. Secondary market buyers are taxed at 12.5% LTCG at maturity post Budget 2026. Premature redemption after 5 years via RBI is also taxable based on gold price at that date. A good calculator will let you input your tax bracket and show a net-of-tax number. Use that, not the gross.
SGB calculator mein kya enter karna hai:
original issue price = wo price jisme RBI ne issue ki thi, aapne jisme khari ki nahi
number of grams = aapke units
holding period = kitne saal rakhna hai
assumed gold price at maturity = yahan multiple scenarios try karo
output kya batata hai:
fixed interest = 2.5% simple interest on issue price, semi-annual payments
maturity value = grams x gold price at maturity
total return = dono milao
secondary market se liya hai toh apni purchase price nahi, original issue price enter karo
interest = taxable at slab, no TDS
capital gains at maturity = only original subscribers ko exemption