Daijiworld Media Network - New Delhi
New Delhi, Apr 20: The Reserve Bank of India has opened a premature redemption window for investors holding Sovereign Gold Bond (SGB) 2020-21 Series VII, with April 20 designated as the exit date. The move allows investors to realise returns exceeding 200 per cent on their initial investment.
The redemption price has been set at Rs 15,254 per unit, based on the average closing price of 999-purity gold over the last three business days, as determined by the India Bullion and Jewellers Association.
Investors who subscribed to the bonds at the original issue price of Rs 5,051 per unit are seeing gains of over 200 per cent. Those who applied online and availed the Rs 50 per gram discount at the time of issuance have achieved even higher effective returns, nearing 205 per cent, excluding interest earnings.
In addition to capital appreciation, SGB holders receive a fixed annual interest of 2.5 per cent, paid semi-annually throughout the investment period.
The bonds, issued on October 20, 2020, became eligible for premature redemption after completing five years, in line with RBI guidelines that allow early exit on designated interest payment dates. While the total maturity period is eight years, investors are not required to hold the bonds until the final term.
To redeem, investors must submit requests through the same channel used during purchase—be it a bank, post office, or the Stock Holding Corporation of India Limited. The redemption proceeds are credited directly to the registered bank account.
Investors are advised to ensure that their bank details and contact information are up to date with their respective institutions to avoid any delays in settlement.
However, taxation rules vary. Under post-Budget 2026 provisions, capital gains remain tax-free only for original subscribers who hold the bonds until maturity. Premature redemptions are subject to long-term capital gains tax if held beyond 12 months, or taxed as per the investor’s income slab for shorter durations.
Additionally, bonds purchased from the secondary market do not qualify for capital gains exemption upon redemption, and the interest earned remains taxable in all cases based on the applicable income tax slab.
Notably, no new Sovereign Gold Bond 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.