The Reserve Bank of India has enabled early redemption for investors holding Sovereign Gold Bond (SGB) 2020-21 Series-VII on April 20, as per its latest notification from the central bank. This move follows the scheme’s guidelines, which allow investors to exit after completing five years from the issue date, specifically on interest payout dates. The rule offers flexibility to bondholders who may want to encash their investment before the full tenure ends.

Typically, SGBs mature after eight years, but this mid-term exit window provides an opportunity for those looking to book profits earlier.

The redemption value is determined using a standard formula based on market-linkedgold prices. It is calculated as the simple average of the closing prices of 999-purity gold over the previous three business days. These rates are published by the India Bullion and Jewellers Association Ltd (IBJA).

“Accordingly, the redemption price for premature redemption due on 20 April, shall be Rs 15,254 (Rupees fifteen thousand two hundred and fifty-four) per unit of SGB based on the simple average of the closing price of gold for the three business days, i.e., 17-17 April 2026,” the RBI stated.

Over 200% Returns For Investors

For others, long-term capital gains (LTCG) on holdings exceeding 12 months are taxed at 12.5 per cent, while short-term gains are taxed as per the investor’s income slab. Bonds purchased from the secondary market do not qualify for tax exemptions upon redemption. Interest income from these bonds remains taxable under applicable slab rates.

Sovereign Gold Bonds, issued by the RBI on behalf of the Government of India, have served as a paper alternative to physical gold investments. They combine capital appreciation potential with sovereign backing and eliminate storage-related concerns.

However, no fresh issuances have been announced for FY 2026–27 so far, and the scheme appears to be on hold amid borrowing concerns. Existing investors can continue holding their bonds until maturity, opt for early redemption when eligible, or trade them on stock exchanges.

She is working as a Chief Copy Editor at Times Now’s Business Desk, where she covers key developments in the stock market, Indian corporates across se...View More

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