The Reserve Bank of India has introduced an early redemption opportunity for investors holding Sovereign Gold Bond (SGB) 2020-21 Series VII, with a deadline set for Monday. The redemption price is fixed at Rs 15,254 per unit, based on the average of gold prices over the preceding three business days as per the India Bullion and Jewellers Association (IBJA).
Investors who subscribed at Rs 5,051 per unit stand to gain over 200% returns, while online applicants who received a discount of Rs 50 per gram could see returns of nearly 205%, excluding interest. SGB holders also receive 2.5% annual interest paid semi-annually during the holding period.
Issued on October 20, 2020, this tranche became eligible for early redemption after five years, in line with RBI guidelines allowing premature exit post the fifth year on interest payment dates. The bonds have an eight-year maturity, but investors are not obligated to hold until final redemption.
To exit, investors must submit redemption requests at the original purchase location, with proceeds credited to their bank accounts on the redemption date. It is advised to update personal details to avoid settlement delays.
Capital gains treatment varies based on holding period and investor category. Post-Budget 2026 rules state that only original subscribers redeeming at full maturity enjoy tax exemption. Early redemptions beyond 12 months attract long-term capital gains tax, while shorter holding periods face slab-rate taxation. Bonds from the secondary market do not offer capital gains exemption on redemption.
No new issuances for FY2026-27 have been announced, and a new issuance calendar is pending as of April 2026, leaving the future of the scheme uncertain.
