SGB Redemption Price: The Reserve Bank of India (RBI) has announced the premature redemption of the Sovereign Gold Bond 2020-21 Series-VII. Investors have received returns of over 200%.
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SGB Redemption Price: The Reserve Bank of India (RBI) has issued a major update for Sovereign Gold Bond investors. According to a fresh notification issued on Monday, April 20, the central bank has announced the premature redemption of the Sovereign Gold Bond 2020-21 Series-VII. This premature withdrawal option has been announced five and a half years after the issuance of the bonds. When these bonds were issued in October 2020, their price was fixed at ₹5,051 per unit. In contrast, as of April 20, 2026, the value has risen to ₹15,254 per unit. This signifies a massive appreciation of over 202% in the investors’ capital.
How is the SGB Redemption Price Determined?
According to the guidelines of the Reserve Bank of India (RBI), the redemption price is determined based on data published by the ‘India Bullion and Jewellers Association Ltd.’ (IBJA). To arrive at this figure, the average of the closing prices of 999 purity gold for the three working days immediately preceding the redemption date was calculated. Based on this calculation, the redemption amount has been fixed at ₹15,254.
Benefit of 2.5% Annual Interest
The most significant feature of Sovereign Gold Bonds is that investors do not merely benefit from the appreciation in the price of gold; they also receive a fixed interest payment at an annual rate of 2.5% throughout the holding period. This implies that over the past five and a half years, investors have also earned interest on a semi-annual basis. Consequently, they are now receiving a return of more than three times their original investment.
What is the Maturity Period of SGBs?
Typically, the total tenure of these bonds is eight years; however, to provide liquidity to investors, the government permits premature redemption after five years.
Are Sovereign Gold Bonds Subject to Taxation?
Exemption from Capital Gains Tax upon Maturity: If you subscribed to an SGB at the time of its initial issuance and held it continuously until maturity, any capital gains realized upon redemption will be entirely tax-free.
Long-Term Capital Gains (LTCG): If SGBs are held for a period exceeding 12 months, the profit realized upon their sale or transfer will be subject to tax at a flat rate of 12.5%.
Short-Term Capital Gains (STCG): If SGBs are held for a period of 12 months or less, the profit generated will be taxed according to your applicable income tax slab rate.
SGBs Purchased from the Secondary Market: If you have purchased SGBs from the secondary market, capital gains realized upon redemption at maturity will not be exempt from tax; these gains will also be subject to taxation.
Interest Income: The interest received on SGBs will be taxable according to your applicable income tax slab rate.
