SGB 2019-20 Series-VI To Deliver 217% Return - Know What Investors Need To Do For Premature Redemption

Investors who have Sovereign Gold Bond (SGB) 2019-20 Series-VI in their portfolio are set to reap as much as 217 per cent return, as the bond is up for premature redemption. According to the Reserve Bank of India (RBI), investors in the SGB 2019-20 Series-VI have the option to redeem their holdings prematurely today, October 30, 2025.

The bond carries an eight-year maturity period; however, investors are allowed to exit after the fifth year from the date of issue, but only on an interest payment date. This gives investors an opportunity to cash in early and lock in gains from the sharp rise in gold prices since the bond’s launch in 2019.

SGB 2019-20 Series-VI Issue Details

The Series VI tranche was open for subscription between October 21 and October 25, 2019, and was issued on October 30, 2019. The issue price for the bonds was fixed at Rs 3,835 per gram. However, investors who applied online received a discount of Rs 50 per gram, which means their effective buying price was Rs 3,785 per gram.

SGB 2019-20 Series-VI Premature Redemption Price

For the SGB 2019-20 Series VI tranche, RBI has fixed the premature redemption price at Rs 11,992 per gram. The redemption price is based on the simple average of the closing price of gold (999 purity) published by the India Bullion and Jewellers Association Ltd (IBJA) for the three business days preceding the redemption date. In this case, the dates were October 22, 23, and 24, 2025.

Given the initial issue price of Rs 3,835 per gram, investors are set to reap 213 per cent returns. Those who bought the SGB online at Rs 3,785 per gram will see their investment value surge by 217 per cent. This absolute return does not factor the 2.5 per cent annual interest paid by the RBI.

SGB 2019-20 Series-VI Premature Redemption Date

As per the Government of India’s notification dated September 30, 2019, investors can opt for premature redemption of SGBs after the fifth year from the date of issue, but only on an interest payment date. For the 2019-20 Series VI tranche, this date falls on October 30, 2025.

Investors who choose to redeem their bonds will have the proceeds directly credited to their registered bank accounts by the RBI.

What Investors Need To Do For Premature Redemption

Confirm that your SGBs belong to the 2019-20 Series-VI, issued on October 30, 2019.

Place a request for premature redemption with your bank, post office, or depository participant (DP) well before the deadline specified by the RBI.

Make sure your bank account and nomination details are up to date to receive the redemption proceeds smoothly.

Sovereign Gold Bond Taxation

SGBs offer a 2.5 per cent annual interest rate, which is paid semi-annually. This interest income is taxable as per the investor’s income tax slab.

However, capital gains at the time of redemption on maturity are fully exempt from tax. If investors sell the bonds in the secondary market before maturity, the gains are taxable depending on the holding period.

If held for less than 12 months, the gains are treated as short-term capital gains (STCG) and are taxed as per the investor’s income tax slab rate.

If held for more than 12 months, gains are treated as long-term capital gains (LTCG) and a flat rate of 12.50 per cent is applicable, without indexation benefits.

What Are Sovereign Gold Bonds?

Sovereign Gold Bonds are government-backed securities denominated in grams of gold. These bonds offer investors a safe and paper-based way to invest in gold without the hassles of storage or purity checks. The bonds are issued by the RBI on behalf of the Government of India and are redeemed in cash at prevailing market prices at the time of maturity or premature redemption.