Announced SGB Premature Redemption: You Can Redeem These Sovereign Gold Bonds Right Now

The SGB 2017–18 Series IV and SGB 2018–19 Series II Sovereign Gold Bond series are being prematurely redeemed, according to a statement released by the Reserve Bank of India (RBI). October 23, 2017 saw the issuance of the Sovereign Gold Bond 2017–18 Series IV, and October 23, 2018 saw the issuance of the SGB 2018–19 Series II. Following five years, the RBI permits early redemption of these bonds in accordance with the coupon payment schedule. Thus, April 23, 2024, is the deadline for this tranche. Based on the simple average of the closing gold price of 999 purity for the preceding three business days from the day of redemption, as reported by the India Bullion and Jewellers Association Ltd (IBJA), the redemption price of both of these kinds of Sovereign gold bonds is Rs 7,325 per unit of SGB.

After eight years from the date of issuance, these SGBs will mature. The fixed rate for the SGBs is 2.50% annually. Principal and interest will be paid at maturity, and interest will be paid twice a year.

Gold Bonds of Sovereignty
Compared to investing in actual gold, purchasing Sovereign Gold Bonds (SGBs) may save money on charges and storage costs, among other benefits. These bonds are also tax-effective at maturity since there is no tax due upon redemption. Within two weeks after issue, SGBs may be traded on stock markets.

One gram is the lowest purchase amount for Sovereign Gold Bonds, while a maximum subscription of four kilograms is permitted.

Due to the increase in gold prices over the last three to four years, investors have witnessed beneficial returns in recent times. As of March 26, 2024, the gold return for the previous year was 11.71 percent, while the return for the previous five years was 14.57%. Given that gold yields a pitiful 7.43 percent return over a ten-year period, retail investors should not invest more than ten percent of their portfolio in it. Since gold is not tax-efficient, one should not consider strategically trading in and out of the asset to profit from its volatility. Should you choose to sell your sovereign gold bonds (SGBs) within three years of purchase, you will be responsible for paying a thirty percent short-term capital gains tax in addition to any relevant surcharge and cess.