SGB Redemption: This government scheme has made investors rich! ₹1 lakh has become ₹3.57 lakh..
Sovereign Gold Bond Redemption: The Reserve Bank of India (RBI) has announced the pre-mature redemption price for the Sovereign Gold Bond (SGB) 2019-20 Series-VIII. Investors who put money into this scheme in 2020 now have the opportunity to redeem their bonds before maturity, starting from July 21, 2026.
According to the new redemption price set by the RBI, investors in this series are realizing a massive return of over 257% driven solely by the rise in gold prices. Let us look at the price fixed by the RBI, the gains involved, and the applicable tax rules.
What redemption price has the RBI fixed?
As per RBI regulations, the pre-mature redemption price is determined based on the simple average of the closing prices of 999-purity gold over the three preceding business days, as published by the India Bullion and Jewellers Association Ltd (IBJA).
Fixed Redemption Price: The RBI has set the redemption price for this series at ₹14,170 per unit (gram).
Redemption Date: Investors can avail themselves of this pre-mature redemption facility starting July 21, 2026.
₹1 lakh turned into ₹3.57 lakh in 5 years!
SGB 2019-20 Series-VIII was launched in January 2020. This bond has generated substantial wealth for its investors:
SGB 2019-20 Series-VIII was launched in January 2020. This bond has generated substantial wealth for its investors:
Understand with an example: If an investor had invested ₹1 lakh in this series online in 2020, that amount has now grown to approximately ₹3.57 lakh. Notably, this 257% return stems solely from the appreciation in gold prices; it does not include the 2.5% annual interest paid by the government.
What are the rules for premature redemption?
According to RBI guidelines, Sovereign Gold Bonds have a total tenure of 8 years. However, investors are permitted to redeem them prematurely on an interest payment date after the completion of five years from the date of issuance. Since the 2019-20 Series-VIII has completed five years, this option has been made available to investors.
Understand the tax rules as well
If you are considering premature redemption for this series, be sure to note the applicable tax rules:
Capital Gains Tax: Under revised tax regulations, investors opting for premature redemption are liable to pay capital gains tax on the profits earned.
Condition for tax-free redemption: Full exemption from capital gains tax is available only to original subscribers who hold the bonds until the full 8-year maturity period.
Secondary market buyers: Investors who purchased SGBs from the secondary market do not qualify for tax-free redemption, even if they hold the bonds until maturity.
Sovereign Gold Bonds have once again proven to be an excellent alternative to physical gold, offering greater safety and superior returns. If you have invested in them and currently require funds, you can redeem your investment and realize these impressive returns.
