SGB Discount Hack: How to Buy Sovereign Gold Bonds Cheaper than RBI Issue Price (Secondary Market Guide)

The “Hidden Sale” on Gold That No One Talks About

In India, we love Gold. Whether it is for a daughter’s wedding, Diwali puja, or just a safety net for bad times, gold is every Indian household’s favorite asset.

Recently, the government’s Sovereign Gold Bond (SGB) scheme has become incredibly popular. Why wouldn’t it be? You get gold appreciation plus an extra 2.5% interest every year. It sounds perfect.

But here is the problem: When the RBI launches a new SGB tranche (Series), the price is usually close to the current market rate. For example, if gold is running at ₹7,500 per gram, the RBI issue price might be ₹7,450.

What if I told you that you could buy the SAME gold bond for ₹7,100 or even ₹7,000?

Yes, you read that right. While everyone waits in line for the new RBI issue, smart investors are quietly buying older SGBs from the Secondary Market (Stock Exchange) at a massive discount.

This is not a scam. This is a legitimate “loophole” or rather a “market inefficiency” that exists because of low liquidity. In this comprehensive guide, I will teach you exactly how to hunt for these discounted gold bonds on apps like Zerodha, Upstox, or Groww, and generate returns that beat even the best mutual funds.

1. What is the “Secondary Market” for SGBs?

To understand the discount, you first need to understand the mechanism.

When you buy an SGB from RBI, it has a lock-in period of 8 years.

However, RBI allows an “Early Exit” after the 5th year.

But what if someone needs money urgently in the 2nd or 3rd year? They cannot sell it back to RBI. Their only option is to sell it on the Stock Exchange (NSE/BSE) to another investor—just like selling a share of Reliance or Tata Motors.

This is the Secondary Market.

• The Seller: Someone desperate for cash who wants to exit early.
• The Buyer: YOU (The smart investor looking for a deal).

Because the seller is desperate and there aren’t many buyers in the bond market, they are often forced to sell their bonds at a price lower than the actual gold rate. This price difference is your Discount.

2. The Mathematics of Profit: Real-Life Example

Let’s break this down with real numbers to see how much you actually make.

Imagine the current date is January 2026.

• Current Market Price of Gold (24K): ₹7,600 per gram.
• RBI New Issue Price: ₹7,550 per gram.

Now, you log into your Demat account and search for an old bond, say “SGBNOV25” (A bond maturing in November 2025).

• You might find it trading at: ₹7,300.

Your Immediate Profit:

₹7,600 (Real Value) – ₹7,300 (Purchase Price) = ₹300 per gram instant gain.

But wait, there is more. You are not just getting the gold cheaper; you are also getting the 2.5% Interest on the Original Face Value of that bond.

This combination of Discounted Price + 2.5% Interest + Gold Appreciation creates a “Yield to Maturity” (YTM) that is often higher than 10-12% risk-free!

3. How to Find & Buy SGBs on Zerodha/Groww (Step-by-Step)

Buying SGBs from the secondary market is slightly tricky because they don’t have simple names like “HDFC Bank”. They have codes.

Step 1: Understand the Symbol Format

SGB symbols on NSE usually follow this format: SGB + Month + Year.

• Example: SGBMAY29 means this bond matures in May 2029.
• Example: SGBFEB27 means this bond matures in February 2027.

Step 2: Check the “Fair Value”

Before buying, go to the NSE Website or IBJArates.com to check the live price of 999 purity gold. Never buy an SGB if it is trading above the gold rate (premium). Only buy when it is at a discount.

Step 3: Search and Buy

1. Open your broker app (Zerodha Kite, Groww, Angel One).
2. In the search bar, type SGB. You will see a long list.
3. Filter by maturity. If you want to invest for 4 years, look for bonds ending in 2029.
4. Important: Always place a LIMIT ORDER. Do not place a “Market Order”. Liquidity is low, and a market order might execute at a high price.

4. The “Catch”: Taxation Rules You MUST Know

This is the most critical part where most bloggers give wrong information. Please pay attention.

Case A: Buying from RBI and holding till maturity (8 years)

• Capital Gains Tax: ZERO (Exempt).
• Interest Tax: Taxed as per your slab.

Case B: Buying from Secondary Market and holding till maturity

• Capital Gains Tax: ZERO (Exempt).
• Interest Tax: Taxed as per your slab.(Yes! If you buy from the secondary market and hold till the redemption date, your capital gains are still tax-free under Section 47(viic) of the Income Tax Act.)

Case C: Buying from Secondary Market and selling BEFORE maturity

• Short Term ( < 12 Months): Taxed as per slab.
• Long Term ( > 12 Months): 12.5% Tax (as per new budget rules, check latest amendments).

The Strategy: To get the maximum benefit, buy discounted SGBs from the secondary market and hold them until they mature. This way, you pocket the discount and pay zero tax on the appreciation.

READ MORE – The “Zero Brokerage” Lie: 7 Hidden Demat Charges & Safety Risks

5. Risks: What Can Go Wrong? (Liquidity Risk)

While this sounds like a “free lunch,” there is one major risk: Liquidity.

The secondary market for SGBs is not very active.

• The Problem: You might buy 50 grams today at a discount. But if you face an emergency next month and try to sell them, you might not find a buyer, or you might have to sell at a huge loss.
• The Solution: Only invest money that you do not need until the bond’s maturity date. Treat this like a Fixed Deposit—put it in and forget it.

6. Which SGB Series Should You Buy in 2025?

Don’t just buy random bonds. Look for the “Sweet Spot.”

1. Avoid bonds maturing very soon (e.g., 2025 or 2026): They usually trade very close to the actual gold price, so the discount is negligible.
2. Avoid very new bonds (e.g., 2032): They have a long lock-in.
3. The Sweet Spot: Look for bonds maturing in 2028, 2029, or 2030. These often have the highest discounts because the sellers are stuck in the middle of the tenure and want to exit.

Pro Tip: Look for volumes. If a bond has “Zero Volume” today, don’t place an order. You need a bond where at least some trading is happening.

Conclusion: Be a Smart “Baniya” Investor

Why pay MRP when you can get a discount?

Buying SGBs from the secondary market requires a little bit of patience. You have to search for the right code, calculate the fair price, and place a limit order. But this extra effort of 10 minutes can earn you an extra 3-5% return on your portfolio completely risk-free.

Next time you have spare cash and want to buy gold, don’t run to the jeweler. Open your Demat account, hunt for a discounted SGB, and let your money work harder for you.

❓ Frequently Asked Questions (FAQ)

Disclaimer: I am not a SEBI registered investment advisor. This article is for educational purposes only. Gold prices fluctuate. Please consult your financial advisor before making large investments.