“Synopsis”
NRIs have several options for investing in gold, including Sovereign Gold Bonds (SGBs), physical gold, and gold mutual funds. This blog explains whether NRIs can buy SGBs, what happens if you become an NRI while holding SGBs, rules around importing gold, and the taxation of gold investment gains in 2025. Understanding these details helps NRIs choose the best gold investment suited to their needs.
Can NRIs Buy Sovereign Gold Bonds (SGBs)?
NRIs are not eligible to subscribe to Sovereign Gold Bonds issued by the Government of India during the subscription period. Only resident Indians can directly invest in SGBs.
However, if an investor holds SGBs and later becomes an NRI, the bonds can be held till maturity, and all benefits continue without interruption.
Investing in Physical Gold
NRIs can import gold into India under the Liberalized Remittance Scheme (LRS), subject to limits (usually up to 1 kg for females and 500 gm for males per financial year). Imported gold is subject to customs duties and import regulations.
Physical gold can also be bought locally by NRIs through jewelry stores or bullion dealers, but the purchase should be from Indian rupee funds or NRO accounts.
Gold Mutual Funds and ETFs
NRIs can invest in Gold Mutual Funds and Gold Exchange Traded Funds (ETFs) through their Demat and trading accounts under the Portfolio Investment Scheme (PIS).
Gold ETFs track the price of physical gold and offer liquidity without the need for physical storage.
Taxation of Gold Investments for NRIs
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Sovereign Gold Bonds: Interest earned on SGBs is taxable as per the investor’s slab rate. Capital gains from redemption after 5 years are exempt from tax.
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Physical Gold: Capital gains tax applies on sale of physical gold. Short-term gains (holding less than 3 years) are taxed as per income tax slab rates; long-term gains get a 20% indexation benefit.
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Gold Mutual Funds & ETFs: Taxed similarly to equity or debt funds based on the holding period and fund type.
What Happens When You Become an NRI While Holding SGBs?
If you become an NRI after purchasing SGBs as a resident Indian:
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You can continue holding the bonds till maturity and receive interest and capital gains as per the original terms.
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Redemption proceeds are repatriable under FEMA guidelines.
Important Points for NRIs Investing in Gold
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NRIs cannot buy SGBs directly but can invest in physical gold and gold funds.
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Import of gold is limited and subject to customs duty.
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Taxation differs by investment type and holding period.
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Always maintain proper documentation for imports and purchases to comply with FEMA.
Conclusion
For NRIs, investing in gold requires careful consideration of eligibility, import rules, and tax implications. While Sovereign Gold Bonds offer great benefits for resident Indians, NRIs can explore physical gold imports and gold mutual funds/ETFs as viable options. Understanding tax rules and compliance requirements is essential to make the most of gold investments in 2025.
