SGB 2019-20 Series V: Investors Set To Make Over 293% Gains Upon Premature Redemption

The Reserve Bank of India (RBI) has announced the premature redemption price for the 2019-20 Series V tranche of the sovereign gold bond (SGB) scheme. Notably, the tranche was issued on October 15, 2019. The RBI has notified October 15, 2026, as the premature redemption date.

SGB 2019-20 Series V Premature Redemption Date

RBI rules allow the premature redemption of SGBs after the fifth year from the date of issue on the date on which the interest is payable. The early redemption window allows investors who hold SGBs to liquidate their holdings before the end of the maturity period.

What Is The Premature Redemption Price & Total Return?

According to the RBI’s notification, investors can prematurely redeem their SGB 2019-20 Series V holdings at a price of Rs 14,725 per unit.

“Accordingly, the redemption price for premature redemption due on October 15, 2026, shall be Rs 14,725/- (Rupees Fourteen Thousand Seven Hundred and Twenty-Five Only) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., October 12, October 13, and October 14, 2026,” the RBI said.

The SGB 2019-20 Series V was issued at Rs 3,788 for offline investors and at Rs 3,738 for online investors with a Rs 50 discount. Investors are set to make strong gains upon prematurely redeeming their holdings.

Online investors will see an absolute return of approximately 293.93 per cent, indicating absolute gains of Rs 10,987 per unit, while offline investors will see absolute returns of approximately 288.73 per cent, indicating absolute gains of Rs 10,937 per unit.

How Is The Premature Redemption Price Calculated?

The premature redemption price for SGBs is computed using the simple average of the closing price of gold of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).

For the SGB 2019-20 Series V, the premature redemption price was calculated specifically on the basis of the simple average of the closing prices on October 12, October 13, and October 14, 2026.

SGB investors who purchased the bond would have also gained an annual interest at the fixed rate of 2.50 per cent in addition to the amount they get upon redemption. However, this interest is credited semi-annually directly to the bank account of investors and remains taxable as per the income tax slab of the investor.

Understanding The Early Redemption Process

Investors who wish to exercise the premature redemption option must act within a specified timeframe. Investors have to submit the request for early redemption to either the receiving office, bank, or post office from where the bond was originally purchased.

Notably, the request has to be made at a minimum of ten days to one month before the next interest payment date. Once a request is verified and processed, the redemption proceeds, along with any pending interest, will be credited into your registered bank account.

Taxation Of SGB Returns

Investors need to be mindful of how SGB proceeds and interest are taxed. The bi-annual interest earned at the rate of 2.50 per cent per annum is added to the total income of the investor and taxed according to the investor’s applicable income tax slab.

Following changes introduced in Budget 2026 (effective April 1, 2026) under Section 70(1)(x) of the Income-tax Act, 2025, the capital gains tax exemption on SGB redemption is now restricted strictly to individuals who subscribed at the original issue and hold the bonds continuously until the full eight-year maturity.

Consequently, investors who opt for premature redemption after the fifth year, or those who purchased SGBs via the secondary market—are no longer exempt and will incur Long-Term Capital Gains (LTCG) tax at 12.5 per cent (without indexation) on their gains.