Summary of this article
RBI sets SGB Series V early redemption at Rs 15,295.
Online investors gain approximately 223 percent in absolute returns.
Early redemption of sovereign gold bonds attracts capital gains tax.
The Reserve Bank of India (RBI) has announced the premature redemption price for the 2021-22 Series V tranche of the sovereign gold bond (SGB) scheme. Notably, the tranche was issued on August 17, 2021. The RBI has also notified August 17, 2026 as the premature redemption date.
SGB 2021-22 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 RBI’s notification, investors can prematurely redeem their SGB 2021-22 Series V holdings at a price of Rs 15,295 per unit.
“Accordingly, the redemption price for premature redemption due on August 17, 2026, shall be Rs 15,295/- (Rupees Fifteen Thousand Two Hundred and Ninety Five Only) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., August 12, August 13, and August 14, 2026,” the RBI said in its official release.
SGB 2021-22 Series V was issued at Rs 4,790 for offline investors and at Rs 4,740 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 223 per cent indicating absolute gains of Rs 10,555 per unit, while offline investors will see absolute returns of 219 per cent, indicating absolute gains of Rs 10,505 per unit.
How Is The Premature Redemption Price Calculated?
The premature redemption price for SGBs is computed using the simple average of 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 2021-22 Series V, the premature redemption price was calculated specifically on the basis of the simple average of the closing prices on August 12, August 13, and August 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 specific timeframe. They need to submit the request for early redemption to either the office, bank, or post office from where the bond was purchased. Notably, the request has to be made at minimum of ten days to one month before the next interest payment date. Once your request is verified and processed, the redemption proceeds, along with any pending interest, will be credited into your registered bank account.
Taxation on SGB Returns
Investors also need to be mindful of the taxation of gains made from the redemption of SGBs. The bi-annual interest earned by SGB investors is added to the total income and taxed according to their applicable income tax slab. On the other hand, if the SGB is held till maturity, any capital gains arising from the redemption are tax exempt. However, for premature redemption, long-term capital gains tax rules apply. For investors who purchase Sovereign Gold Bonds (SGBs) from the secondary market, the tax treatment on capital gains is fully taxable following the changes introduced in Union Budget 2026.
