One More Sgb Redemption: Rbi Fixes Rs 9,600 Premature Redemption Price For Bonds Due On April 28

The Reserve Bank of India (RBI) has group nan premature redemption value for nan Sovereign Gold Bond (SGB) Scheme, Series I of 2020-21, astatine Rs 9,600 per unit. The redemption day for this tranche is scheduled for April 28, 2025.

Under nan Government of India’s guidelines, SGBs connection investors an early exit action aft completing 5 years from nan day of issuance, moreover though nan wide maturity play is 8 years. For Series I of 2020-21, issued connected April 28, 2020, nan five-year lock-in ends this month, enabling eligible bondholders to redeem their holdings up of maturity.

The redemption value is calculated based connected nan elemental mean of nan closing golden value of 999 purity complete nan preceding 3 business days, arsenic published by nan India Bullion and Jewellers Association Ltd (IBJA). Accordingly, nan prices from April 23, 24, and 25, 2025, were considered to get astatine nan last redemption fig of Rs 9,600 per gram.

Earlier this week, nan RBI besides announced premature redemption prices for 2 different SGB bid — Series IV of 2017-18 and Series II of 2018-19 — some of which became eligible for early redemption connected April 23, 2025. These bonds, issued connected October 23 of their respective years, had likewise completed their minimum five-year tenure, allowing investors to exit astatine nan adjacent liking costs cycle.

Sovereign Gold Bonds proceed to beryllium a celebrated finance action for individuals looking to summation vulnerability to golden without nan challenges of beingness storage. 
The strategy provided an yearly liking complaint of 2.5% and imaginable superior maturation tied to golden prices. SGBs person an eight-year term, pinch nan action for investors to redeem them early starting from nan 5th year. Early redemption is permitted only connected peculiar liking costs dates, which hap doubly a year. Any profits realized from redemption are exempt from taxes if held until maturity. Governed by nan Government of India, SGBs are regarded arsenic a reliable and effective finance vehicle.

Apart from offering assured yearly liking of 2.5% connected nan first investment, SGBs besides bask superior gains taxation exemption if held till maturity, making them a tax-efficient instrumentality for semipermanent investors. 

Investors should statement if nan early redemption model is missed, investors will not suffer their investment. The enslaved will proceed to accrue an yearly fixed liking complaint of 2.5% until it matures successful 8 years. Investors besides person nan action to waste nan bonds successful nan secondary marketplace astatine existent marketplace prices.

Tax Implications

The liking earned connected Sovereign Gold Bonds (SGBs) is taxable nether nan Income-tax Act, 1961. It is classified arsenic ‘Income from Other Sources’ and taxed according to your applicable income taxation slab rate, meaning it is added to your full income and taxed astatine nan marginal rate.

When it comes to redemption, location are important distinctions. If you opt for premature redemption done nan RBI’s designated model — disposable aft completing 5 years of holding — nan proceeds are afloat exempt from Long Term Capital Gains (LTCG) taxation nether existent taxation rules.

However, if you take to waste SGBs successful nan secondary marketplace alternatively of utilizing nan RBI redemption route, nan gains will pull superior gains tax. Additionally, applicable surcharges and nan wellness and acquisition cess will besides beryllium levied.

Therefore, investors aiming to maximize taxation ratio should either redeem SGBs during nan RBI’s premature exit model aliases clasp them until nan afloat maturity play of 8 years. Notably, if you clasp nan bonds until maturity, immoderate superior gains realized are wholly tax-exempt, arsenic nan maturity proceeds are not treated arsenic a transportation nether nan superior gains provisions.

Choosing nan correct exit action is important to minimizing taxation liabilities and making nan astir of your Sovereign Gold Bond investment.

Published on: Apr 26, 2025 8:59 AM IST