A few Sovereign Gold Bonds (SGBs) can be redeemed in September, as per the redemption calendar released by the Reserve Bank of India earlier this month.

The central bank announced the premature redemption schedule for SGBs between October 2024 and March 2025.

The maturity of Sovereign Gold Bonds 2016-17 Series-II is due in the last week of September while premature redemption requests can be submitted for SGBs 2017-18 Series III, IV and V between September 16 and September 30.

According to the RBI schedule, SGBs issued between May 2017 and March 2020 can be redeemed after a five-year holding period. The RBI has allowed premature redemption of SGBs issued in 30 tranches.

The final redemption of Sovereign Gold Bonds (SGBs) could be impacted by current gold prices. Fluctuations in gold prices can affect the final amount received by investors.

The Sovereign Gold Bonds, introduced by the government in November 2015, have been issued to investors in different tranches. The SGBs come with a maturity period of 8 years, but the investors have the option to exit after the 5th year.

The scheme was launched to offer investors an alternative to physical gold and returns aligned to the market price of the yellow metal.

The 2016-17 Series-II SGBs were issued in 2016 with an 8-year maturity period. The bonds provide a fixed interest rate of 2.5% per annum, which is paid half-yearly.

Final Redemption Process

• Redemption Date: The exact date of final redemption will be announced by the RBI and the issuing banks. Investors should check with their banks or financial institutions for specific dates.
• Redemption Price Calculation: The redemption price will be based on the average closing price of gold of 999 purities for the three business days preceding the redemption date. This average price is published by the India Bullion and Jewellers Association Limited (IBJA). This method ensures that the redemption value reflects the prevailing market price of gold.
• Payment Procedure: Upon redemption, the principal amount along with any accrued interest will be credited to the investor’s registered bank account or demat account. Investors should verify their account details with their issuing institution to ensure accurate and timely credit of funds.

Tax Implications

Sovereign Gold Bonds offer tax benefits including exemption from capital gains tax if held until maturity. However, the interest earned on SGBs is taxable as the ‘Income from Other Sources’. The capital gains from redemption at maturity are tax-exempt.