New Delhi — The Reserve Bank of India has opened a premature redemption window for holders of Sovereign Gold Bond (SGB) 2020-21 Series VII, with Monday designated as the exit date. The move allows investors to unlock substantial gains, with returns exceeding 200 per cent on the original investment.
The redemption price has been fixed at ₹15,254 per unit, based on the simple average of closing prices of 999-purity gold over the previous three business days, as determined by the India Bullion and Jewellers Association.
Investors who subscribed to the bonds at the issue price of ₹5,051 per unit are now seeing capital appreciation of more than 200 per cent. Those who applied online and availed the ₹50 per gram discount at the time of issuance have effectively earned close to 205 per cent returns, excluding interest income.
In addition to capital gains, SGB investors receive a fixed annual interest of 2.5 per cent, paid semi-annually throughout the holding period.
The bonds, originally issued on October 20, 2020, have now completed five years, making them eligible for premature redemption in line with RBI guidelines. While the bonds have a total maturity period of eight years, investors are allowed to exit early on designated interest payment dates after the fifth year.
To redeem their holdings, investors must submit requests through the same channel used for purchase—be it a bank branch, post office, or the Stock Holding Corporation of India Limited. Redemption proceeds are credited directly to the registered bank account on the payout date.
Investors are advised to ensure that their bank details, mobile number, and email ID are updated with their respective institutions to avoid delays in processing.
On the taxation front, capital gains treatment depends on the holding period and mode of investment. As per post-Budget 2026 norms, tax exemption on capital gains is available only to original subscribers who hold the bonds until full maturity. Premature redemptions are subject to long-term capital gains tax if held for over 12 months, while shorter holding periods attract taxation as per the investor’s income slab.
Additionally, bonds purchased from the secondary market do not qualify for capital gains exemption upon redemption. Interest earned on SGBs remains taxable in all cases, based on the investor’s applicable tax bracket.
Notably, no new SGB issuances have been announced for FY2026–27 so far, and the government has yet to release a fresh issuance calendar, raising uncertainty about the future of the scheme.
With inputs from IANS