The Reserve Bank of India (RBI) has fixed the premature redemption price at ₹15,310 per gram for Sovereign Gold Bonds (SGB) issued under the 2019-20 Series III. These bonds were originally issued online on August 14, 2019, at ₹3,449 per unit, delivering returns of more than 344% over the period based on the redemption price.
For an investor who put ₹1 lakh into the bonds at the time of issuance, the investment would now be worth approximately ₹4.44 lakh, excluding the interest received separately. In addition to the rise in gold prices, SGB investors also earned a fixed interest of 2.5% per annum on their original investment, providing an additional source of returns.
However, investors should also consider the applicable tax rules. Under the 2026 tax provisions, the capital gains tax exemption on SGBs is available when the bonds are held until the completion of their full eight-year maturity period. The exemption does not apply to premature redemption carried out after five years, making the holding period an important factor for investors.
