Sovereign Gold Bonds - Everything NRIs Need to Know

We've had at least a dozen clients from Dubai call us this month asking the same question: Should I invest in Sovereign Gold Bonds?"

Here's what we tell them: if you're an NRI right now, you can't buy new SGBs. And even if you were allowed to, the scheme was discontinued in Union Budget 2025.

But here's what matters more - why NRIs care about SGBs, what made them attractive, what's happened to existing bonds, and most importantly, what better alternatives you have in 2025 that are actually designed for NRIs living abroad.

At Belong, we've helped hundreds of NRIs navigate these exact questions. Our WhatsApp community is full of people from the UAE, UK and US asking about gold investments, tax implications and repatriation rules. This article answers everything in one place - so you don't have to click through ten different websites.

The Direct Answer: Can NRIs Invest in Sovereign Gold Bonds?

No. NRIs cannot invest in Sovereign Gold Bonds.

This restriction comes from the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999. When SGBs were launched in November 2015, they were open only to resident Indians, Hindu Undivided Families (HUFs), trusts, universities and charitable institutions registered in India.

The one exception: If you invested in SGBs as a resident Indian and later became an NRI, you can hold those bonds until maturity or early redemption. Your residency status change doesn't force you to sell. The bonds remain valid, you'll continue earning 2.5% annual interest, and redemption proceeds will be paid in Indian rupees to your NRO account.

👉 Tip: If you moved abroad after buying SGBs, there's no need to panic. Your investment is safe and protected under RBI guidelines.

Breaking News: Union Budget 2025 Discontinued the Entire SGB Scheme

Here's the bigger story: even resident Indians can't buy new Sovereign Gold Bonds anymore.

Finance Minister Nirmala Sitharaman confirmed in Union Budget 2025 that the government has discontinued the SGB scheme. No new tranches will be issued going forward.

Why did the government stop SGBs?

Gold prices soared over 40% in 2025 alone. When someone invested ₹50,000 in an SGB in 2017 at ₹2,964 per gram, the government now has to pay back based on October 2025 prices of ₹11,380+ per gram according to RBI redemption schedules. That's a 284% increase.

The government's outstanding debt on SGBs ballooned to ₹1.5 lakh crore as of March 2025. With 126 tonnes of gold equivalent held in SGBs and still paying 2.5% interest annually, the scheme became too expensive to sustain.

The last SGB tranche was issued in February 2024. Budget 2025-26 allocated ₹18,500 crore for SGBs (down from ₹26,852 crore), but no new bonds have been released this fiscal year.

What Exactly Are Sovereign Gold Bonds?

Let us explain SGBs quickly for context.

Sovereign Gold Bonds are government securities denominated in grams of gold. They were launched in November 2015 under the Gold Monetization Scheme as a safer alternative to buying physical gold.

Here's how they worked:

Denomination: 1 gram units and multiples thereof
Interest: 2.5% per annum, paid semi-annually
Tenure: 8 years, with exit option after 5 years
Issue price: Based on simple average of gold's closing price (999 purity) over the previous 3 business days, as published by India Bullion and Jewellers Association (IBJA)
Redemption: At maturity, you get the rupee value equivalent to the prevailing gold price
Maximum limit: Individuals could invest up to 4 kg per financial year

SGBs were held either in demat form or as physical certificates issued by RBI.

The appeal was simple: you got gold price appreciation plus 2.5% interest, without worrying about storage, purity or theft.

Why SGBs Were So Attractive (And Why They're Now History)

For resident Indians, SGBs were almost perfect:

Government guarantee – Issued by RBI on behalf of Government of India, making them as safe as government securities.

Dual returns – You earned 2.5% annual interest (paid every six months) PLUS capital appreciation if gold prices rose.

Tax benefits – Capital gains on redemption after 8 years were completely tax-exempt for individuals. If you held till maturity, you paid zero tax on the profit.

No storage costs – Unlike physical gold, no locker rent, no making charges, no purity concerns.

Collateral facility – Banks accepted SGBs as collateral for loans.

Let's look at real returns: Someone who invested in SGB 2017-18 Series III at ₹2,964 per gram got a redemption price of ₹9,221 in April 2025 - a 211% return excluding interest. Add the 2.5% annual interest over 8 years, and the total return was well over 230%.

But these bumper returns became a burden for the government. As Economic Affairs Secretary Ajay Seth noted, although ₹18,500 crore was budgeted for SGBs in FY25, no new SGBs were issued because the borrowing costs became unsustainable.

The government also cut gold import duty from 15% to 6% in Budget 2024, signaling a strategic shift toward addressing gold demand through direct imports rather than paper gold schemes.

If You Already Hold SGBs as an NRI - Here's What You Need to Know

If you're an NRI who invested in SGBs before you moved abroad, don't worry. Your bonds are completely safe.

Here's what happens:

You can hold until maturity – The 8-year tenure stays intact. If your bonds mature in 2027, you'll get full redemption at prevailing gold prices in 2027.

Early exit remains available – After completing 5 years, you can redeem on any interest payment date. Check RBI's redemption schedule to see when your tranche is eligible.

Interest continues – You'll keep receiving 2.5% annual interest (paid semi-annually) until redemption.

Redemption proceeds are non-repatriable – When you redeem, the money will be credited to your NRO account in rupees. You cannot directly repatriate these funds, though general repatriation limits for NRO accounts apply (up to USD 1 million per financial year after taxes and compliance).

Tax treatment for NRIs:
If you redeem through RBI's official window and you're an individual investor, capital gains remain tax-exempt at maturity. But this benefit only applies to individuals - not HUFs, companies or trusts. If you sell SGBs on the stock exchange (secondary market), you'll face capital gains tax.

Nomination: If you nominated an NRI before your status change, that nominee can inherit the bonds but must hold them till maturity. Interest and redemption proceeds remain non-repatriable.

👉 Tip: Keep track of your SGB maturity dates and early redemption windows. Missing a redemption date won't hurt you, but staying informed helps you plan better. We track these dates for our community members - join our WhatsApp group to get reminders.

Why NRIs Were Never Allowed to Buy SGBs in the First Place

FEMA (Foreign Exchange Management Act) 1999 sets strict rules on what NRIs can and cannot invest in. The idea is to manage foreign exchange risk and protect India's economic interests.

SGBs were designed specifically to:

1. Reduce India's gold import bill (by converting physical demand into paper form)
2. Mobilize gold held by Indian households
3. Provide a domestic savings instrument

Since NRIs live abroad and earn in foreign currency, allowing them to buy SGBs would dilute the scheme's purpose. The government wanted to keep SGBs a domestic instrument for residents only.

That's why even though NRIs can invest in mutual funds, stocks, NRI fixed deposits, and real estate in India, SGBs were off-limits from day one.

Your Gold Investment Alternatives in 2025: What Actually Works for NRIs

So if SGBs are dead and you're an NRI, how do you invest in gold?

Good news: you have multiple options. Let us walk through each one.

1. Gold ETFs (Exchange Traded Funds)

Gold ETFs are mutual funds that track the price of physical gold. One unit typically equals 1 gram of 99.5% pure gold.

How it works for NRIs:
You need a demat and trading account linked to your NRE or NRO account. Buy and sell Gold ETF units on NSE or BSE just like stocks.

Advantages:

• High liquidity - sell anytime during market hours
• Transparent pricing - directly linked to live gold prices
• No storage worries
• Lower costs than physical gold (no making charges)

Tax implications:

• Short-term (held \< 24 months): Gains taxed at your income tax slab rate
• Long-term (held > 24 months): 12.5% tax without indexation benefit

If you buy and sell through stock exchanges, no TDS. If you redeem directly with the fund house, TDS applies.

Repatriation: If you invested through an NRE account, full repatriation is allowed. If through NRO, up to USD 1 million annually subject to tax and compliance.

Best for: NRIs who want liquidity, don't mind opening a demat account, and are comfortable with stock market-style trading.

2. Digital Gold

Digital gold lets you buy 24-karat gold online in amounts as small as ₹10. Your gold is stored in secure vaults by platforms like SafeGold, MMTC-PAMP, or Digital Gold India.

How it works for NRIs:
Download the platform's app, complete KYC, link your NRE/NRO account, and start buying. Your gold is stored by custodians like Brink's or G4S.

Advantages:

• Fractional investing (buy ₹100 worth of gold)
• Instant liquidity (sell and get money in 1-2 days)
• 24K purity guarantee
• No demat account needed

Tax implications:
Same as physical gold:

• Short-term (\< 24 months): Taxed at slab rate
• Long-term (> 24 months): 12.5% without indexation

Repatriation: Similar to Gold ETFs - full repatriation if through NRE account, capped at USD 1 million annually if through NRO.

Best for: NRIs who want simple, app-based investing without the complexity of demat accounts.

3. Physical Gold (Jewelry, Coins, Bars)

The traditional method. Buy gold jewelry from jewelers or gold coins/bars from banks.

Advantages:

• Tangible asset you can hold
• Cultural and emotional value
• No demat/trading account needed

Disadvantages:

• Making charges (15-25% on jewelry)
• Storage and security risks
• Purity concerns (even with hallmark)
• Lower liquidity (finding a buyer takes time)

Tax implications:

• Short-term (\< 24 months): Slab rate
• Long-term (> 24 months): 12.5% without indexation

When you buy jewelry in India, you pay 3% GST on the total price including making charges.

Repatriation: Physical gold cannot be repatriated (you can't take gold bars on a plane). But if you sell and credit proceeds to NRO, you can repatriate up to USD 1 million annually.

Best for: NRIs who value tradition, buy gold for family occasions, or want to gift physical gold.

Also Read -How Much Gold Can I Carry From The UAE To India in United Arab Emirates: Your Complete Guide

4. Gold Mutual Funds

Gold mutual funds are fund-of-funds that invest in Gold ETFs and related gold assets. You don't need a demat account - just a mutual fund account through your bank or platform.

How it works for NRIs:
Invest via NRE or NRO account. The fund buys Gold ETFs on your behalf.

Advantages:

• No demat account needed
• SIP option available
• Simpler than buying ETFs directly

Tax implications:
Effective from July 23, 2024 (FY 2024-25):

• Long-term (> 24 months): 12.5% without indexation
• Short-term (\< 24 months): Slab rate

Gains can be repatriated through NRE accounts.

Best for: NRIs who prefer mutual fund-style investing and don't want the hassle of opening a demat account.

Comparison Table: Gold Investment Options for NRIs

Second Comparison: Gold Investments vs USD Fixed Deposits (Our Recommendation)

At Belong, we often recommend NRIs diversify: keep some allocation to gold (10-15% of portfolio), but also consider USD fixed deposits in GIFT City for stable, tax-free returns. Our FD rates explorer lets you compare GIFT City FD rates instantly.

Tax Implications for NRIs Investing in Gold: The Complete Picture

Let's break down taxation clearly because this is where most NRIs get confused.

Capital Gains Tax Rules (Effective April 2025):

For all forms of gold (physical, digital, ETFs, mutual funds):

Short-Term Capital Gains (STCG) - if you hold for less than 24 months:
Taxed at your income tax slab rate. For most NRIs, this ranges from 20% to 30% depending on total income.

Long-Term Capital Gains (LTCG) - if you hold for 24 months or more:
Taxed at a flat 12.5% without indexation benefit. This means you pay 12.5% on the entire gain, not just the inflation-adjusted gain.

Example:
You bought Gold ETF in January 2023 for ₹1,00,000.
You sell in March 2025 for ₹1,50,000.
Gain = ₹50,000.
Tax = 12.5% of ₹50,000 = ₹6,250.

TDS Rules:

• Gold ETFs sold through stock exchanges: No TDS
• Gold ETFs redeemed directly with fund house: TDS applicable
• Physical gold sold: No TDS, but buyer may report if value > ₹10 lakh

Wealth Tax:
There is no wealth tax in India as it was abolished in Budget 2015. However, high-value assets are tracked under other reporting requirements.

Gift and Inheritance:
Gold received as a gift from parents, spouse or children is tax-free under Section 56(2) of the Income Tax Act. If received from others and value exceeds ₹50,000, it's taxable.

Double Taxation Avoidance Agreement (DTAA):
If you're in a country like UAE (which has DTAA with India), you can claim foreign tax credit to avoid being taxed twice. Check our guide on DTAA India-UAE for details.

👉 Tip: Always file your ITR as an NRI even if your income is below the taxable threshold. It helps when you need to show compliance for repatriation or other financial activities.

Also Read - DTAA Benefits on Mutual Fund Capital Gains for NRIs

Repatriation: Can You Move Gold Investment Money Out of India?

This is a common question: "If I make money from gold in India, can I transfer it to my UAE bank account?"

Answer: It depends on the account type and amount.

If you invested through NRE (Non-Resident External) account:
Yes, full repatriation is allowed. Principal and gains can both be transferred abroad freely.

If you invested through NRO (Non-Resident Ordinary) account:
You can repatriate up to USD 1 million per financial year (April-March) across all asset classes (gold, real estate, FDs, etc.). You need to submit:

• Form 15CA and 15CB
• Tax payment proof
• CA certification (in some cases)

Check our guide on how to repatriate funds from NRO accounts.

Also Read -NRE vs NRO vs FCNR

Physical gold:
You cannot take gold bars or jewelry out of India beyond the duty-free limit (male travelers: up to 20 grams worth ₹50,000; female travelers: up to 40 grams worth ₹1,00,000)

. Beyond that, you pay customs duty or risk confiscation. The better route is to sell gold in India, credit proceeds to NRO, and then repatriate cash.

For NRIs in UAE: Which Gold Investment Makes Most Sense?

If you're living in Dubai, Abu Dhabi or anywhere in the UAE, here's my honest recommendation:

For cultural/gifting purposes:
Buy physical gold when you visit India during festivals. But keep it reasonable. Don't treat it as a primary investment due to making charges and illiquidity.

For short-term speculation (if you think gold will spike):
Gold ETFs. They offer the best liquidity. You can exit quickly if gold prices jump.

For long-term wealth building:
Diversify. Allocate 10-15% to gold (via digital gold or Gold ETFs) for inflation protection. But don't go overboard.

Here's why: Gold is volatile. In the last 5 years (2020-2025), gold has returned approximately 120% cumulatively in dollar terms (based on annual returns: 24.4% in 2020, -3.5% in 2021, -0.2% in 2022, 13.1% in 2023, 27.2% in 2024, and 52.5% YTD 2025). (source)

But Indian investors saw even higher rupee returns due to currency depreciation. However, gold doesn't give regular income.

Better alternative for NRIs in UAE:
USD fixed deposits in GIFT City. You get:

• 4.5-5% annual returns (tax-free)
• Capital protection
• Hedge against rupee depreciation
• Simple repatriation

We built Belong's platform specifically for this. You can open USD FDs in GIFT City from Dubai without flying to India. KYC is done digitally, funds transfer is seamless, and you avoid all the currency conversion costs that eat into your returns with traditional NRE FDs.

Use our FD rates comparison tool to see current rates.

Pro strategy for UAE-based NRIs:

• 60-70%: USD FDs (stable, tax-free)
• 15-20%: Equity mutual funds (growth)
• 10-15%: Gold ETFs/digital gold (inflation hedge)
• 5%: Emergency liquid funds

This balances safety, returns and tax efficiency better than going all-in on gold.

Common Mistakes NRIs Make When Investing in Gold

Over the years at Belong, we've seen NRIs make these avoidable errors:

Mistake 1: Buying physical gold for investment (not culture)
Unless it's for a wedding or festival, physical gold is inefficient. Making charges, storage costs and low liquidity make it a poor pure investment.

Mistake 2: Ignoring tax implications
Many NRIs buy gold thinking it's tax-free. It's not. Capital gains tax applies. Always factor in 12.5% LTCG when calculating returns.

Mistake 3: Not tracking repatriation rules
You bought gold via NRO, made a profit, but now can't repatriate easily because you didn't plan for compliance. Always link investments to the right account type (NRE for full repatriation, NRO if you're okay with the USD 1 million cap).

Mistake 4: Holding too much gold
Gold is a hedge, not a primary growth asset. If more than 25% of your portfolio is in gold, you're likely giving up equity returns and stable fixed-income options.

Mistake 5: Ignoring currency risk
If you're in UAE, you earn in AED/USD. Investing all savings in rupee-denominated assets (including rupee gold ETFs) exposes you to currency depreciation. Diversify with USD-denominated assets.

👉 Tip: If you're unsure where to start, join our WhatsApp community. We have tax experts, CAs, and fellow NRIs who've been through the same questions. Learn from real experiences, not just theory.

Final Thoughts: Don't Chase Gold Blindly - Build a Balanced Portfolio

Gold has always been special for Indians. It's culture, tradition and security rolled into one. But as an NRI, your investment strategy should be smarter than just loading up on gold.

Here's what we recommend:

Diversify. Gold should be 10-15% of your portfolio, not 40-50%.

Tax matters. Every rupee you save in tax is a rupee you keep. GIFT City USD FDs are completely tax-free. Compare them with gold returns after tax.

Repatriation matters. If you're planning to move back to India eventually or want to send money abroad, link investments to NRE accounts. Don't lock yourself into NRO-only assets.

Stay updated. Rules change. Budgets change. New schemes launch. That's why we created Belong's WhatsApp community - so you don't have to track every RBI circular yourself. We do it for you.

Since 2024, we've helped hundreds of NRIs from UAE, UK and US invest smarter through GIFT City. Our USD FDs give you 4.5-65% returns (tax-free), rupee depreciation protection, and seamless repatriation. No complex paperwork. No flying to India for KYC.

Ready to explore?
Download the Belong app and see current USD FD rates. Or use our GIFT Nifty tracker, Rupee vs Dollar tool, and Compliance Compass to stay ahead of the curve.

And if you just want honest, no-BS advice from people who've been there, join our WhatsApp community. Ask questions. Share experiences. Make smarter financial decisions.

Because at Belong, we're not just building a platform. We're building a community of NRIs who want their money to work harder - and smarter - for them.

Sources & References

Reserve Bank of India - Sovereign Gold Bonds Overview

Union Budget 2025 - SGB Discontinuation Announcement

GoINRI - Can NRIs Invest in Sovereign Gold Bonds

Business Today - RBI SGB Redemption Schedule 2025-26

The Wire - Govt's SGB Debt Surges to Rs 1.5 Lakh Crore

ClearTax - Sovereign Gold Bonds 2024-25 Guide

Wikipedia - Sovereign Gold Bond Scheme

Tax2win - NRI Gold Investment Taxation

ICICI Bank - Your Guide to Investing in Gold as an NRI

Stack Wealth - Union Government Discontinues SGBs