The Reserve Bank of India (RBI) has announced the premature redemption schedule for Sovereign Gold Bond (SGB) 2019-20 Series-V. Investors holding this tranche will have the option to redeem their bonds early on 15 April 2026.
According to the Government of India notification dated 30 September 2019, premature redemption of the sovereign gold bond is permitted after the completion of 5 years from the date of issue, only on interest payment dates.
Since this tranche was issued on 15 October 2019, the upcoming interest payout date of 15 April 2026 has been designated as the next eligible window for early redemption of the SGB.
“Premature redemption of Gold Bond may be permitted after the fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the next due date of premature redemption of the above tranche shall be on 15 April 2026,” RBI said in an official release.
Premature redemption price of the SGB and how it is calculated
According to the apex bank, the redemption price of SGB is determined by the simple average of the closing gold prices of 999 purity over the three business days preceding the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA).
Accordingly, for the premature redemption due on 15 April 2026, the redemption price has been fixed at ₹15,009 per unit. This has been calculated based on the simple average of the closing gold prices recorded on 9 April, 10 April, and 13 April, 2026.
How much can investors of this tranche profit from the redemption?
The SGB 2019-20 Series-V was originally issued at ₹3,738 per gram for online subscribers. With the redemption price set at ₹15,009 per unit, investors’ gains are substantial.
For instance, if an investor holds 10 units of this tranche, the total redemption value would amount to ₹1,50,090, against an initial investment of ₹37,380; hence, the investor would have a profit of ₹1,12,710, excluding any additional interest income earned over the holding period.
The current interest rate for SGB is 2.50% per annum, which is paid twice a year (semi-annually) for 8 years. An investor has to make a minimum initial investment of 1 gram of gold, according to ClearTax.
While the interest earned on the bonds is taxable, the capital gains tax arising on redemption of SGB by an individual is exempt from tax, according to the RBI.
