The Reserve Bank of India (RBI) has announced the premature redemption price of Sovereign Gold Bond scheme SGB 2020-21 Series-I-Issue date April 28, 2020.
The subscription dates for this series were April 20-24, 2020, and the bond was issued on April 28, 2020. At that time the price of these bonds was fixed at Rs. 4,639 and Rs 4,589 per gram for online bids.
The redemption price is calculated under RBI rules. For this, the average price of 999 purity gold of the last three business days published by the India Bullion and Jewelers Association (IBJA) is taken.
The redemption price for premature redemption due on April 28, 2026, is fixed at Rs 15,124 per unit of SGB based on the simple average of closing price of gold for the three business days i.e., April 23, April 24, and April 27, 2026.
SGBs have an eight-year duration, but investors may redeem them before the fifth year. Sovereign Gold Bond Scheme, premature redemption of Gold Bond is permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the due date of premature redemption of the above tranche is April 28, 2026.
Investors in the Sovereign Gold Bond scheme SGB 2020-21 Series-I-Issue stand to gain 230% over the 5 years. The investors end up gaining an annualized return of 27% in this series of SGBs.
There is an additional return of 2.5%, half-yearly paid to the SGB investors.
But, watchout the new tax rules on gains.
A big change has been introduced in the taxation of SGBs in Budget 2026. The capital gains from gold bonds will be exempt from tax if the bond was purchased during primary issuance and held for a full 8 years until maturity. Premature withdrawal through the RBI does not qualify for this exemption.
Capital gains from SGBs will be taxable if they are bought in the secondary market, sold in the secondary market, or redeemed during a premature withdrawal window, regardless of the original purchase method.
Disclaimer: This article is intended for general awareness only and should not be construed as tax or investment advice. Tax treatment of SGB gains may vary based on individual circumstances and is subject to change. Readers are strongly advised to consult a SEBI-registered investment advisor or qualified tax professional before making any redemption or investment decisions. Financial Express is not responsible for any decisions made based on this information.
