RBI Fixes Early Redemption Price of SGB 2019-20 Series VII at ₹15,275 Per Unit

The Reserve Bank of India has declared the premature redemption for the Sovereign Gold Bond of 2019-20 Series VII, which is scheduled for June 10, 2026. The RBI has fixed the redemption price of the bond at ₹15,275 per unit while the issue price stands at ₹3,745 per gram, thus giving a total return of 307.87%, not considering the accrued interest.

For investors who subscribed online and availed the ₹50 per gram discount offered at the time of issuance, the effective issue price was ₹3,695. Based on that cost, the appreciation works out to 313.39%.

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The redemption is being allowed under the provisions of the Sovereign Gold Bond Scheme, the RBI said in a notification dated June 9, 2026. Under the scheme, investors can opt for premature redemption after completing five years from the date of issue, provided the request coincides with an interest payment date.

The 2019-20 Series VII bonds were issued on December 10, 2019. While the bonds carry an original tenure of eight years, investors became eligible for early exit after the completion of the fifth year.

Redemption Price Based on Gold Rates

The central bank said the redemption value has been determined using the simple average of the closing price of gold published by the India Bullion and Jewellers Association (IBJA) for three business days preceding the redemption date - June 5, June 8 and June 9, 2026.

The sharp rise in redemption value reflects the significant appreciation in domestic gold prices over the last several years.

Apart from capital gains linked to gold prices, SGB holders also receive a fixed annual interest of 2.5% on the initial investment amount. The interest is paid semi-annually and credited directly to the investor’s registered bank account.

Tax Benefits Continue to Apply

The tax treatment of Sovereign Gold Bonds remains one of the key attractions of the instrument. Income accruing on interest from the SGBs will be taxable as per the provisions of the Income Tax Act, 1961.

On the other hand, capital gain realized from SGB bonds by individuals upon their maturity and redemption will be exempt from taxation. Whenever there is a transfer prior to maturity, the resultant capital gain is eligible for indexation as per tax regulations.

Scheme Still Valid for Current Bond Holders

The Sovereign Gold Bond Scheme was introduced in India in 2015 as an alternative investment avenue for individuals looking to invest in gold but in a financial form rather than physical. This is an instrument that will allow an investor to hold a specified number of grams of gold through the issuance of the bond by the RBI on behalf of the Indian government.

Although new issues from the scheme have been suspended since October 2023, the current bondholders are still entitled to continue to hold these bonds up to maturity.