New Delhi, April 20: The Reserve Bank of India (RBI) has opened a premature redemption window for investors of the Sovereign Gold Bond (SGB) 2020-21 Series VII. This move allows investors to exit the scheme and realize significant returns.
The central bank has set the redemption price for this series at ₹15,254 per unit. This price is determined based on the average price of 24-carat gold over the last three business days, as reported by the India Bullion and Jewellers Association (IBJA).
Initially, the issue price for SGB 2020-21 Series VII was ₹5,051 per unit. Therefore, investors opting for premature redemption can expect a return of approximately 205% on their investment.
Additionally, the government offers an annual interest rate of 2.5% on SGB investments, which is paid out biannually.
The SGB 2020-21 Series VII was issued on October 20, 2020. According to regulations, it has a maturity period of eight years, but investors are given the option for premature redemption after a holding period of five years.
Investors wishing to exit must submit their redemption request at the bank branch, SHCIL office, or post office where the bonds were purchased. The amount received on the redemption date is automatically credited to the registered bank account.
However, the tax implications on capital gains vary based on the holding period and investor category. According to the rules post-Budget 2026, profits from bonds redeemed at full maturity remain tax-free for original customers.
For bonds redeemed prematurely or before maturity, long-term capital gains tax applies if held for more than 12 months, while short-term holdings are taxed according to slab rates.
Bonds purchased from the secondary market do not qualify for capital gains exemptions, and interest income is taxable based on the investor’s applicable income slab.
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Arpit Soni has had a passion for journalism since the beginning. Now he has turned this hobby into his profession. Arpit, who is a resident of Udaipur, enjoys editing and writing news related to journalism. He has worked as a Senior Content Producer in several important roles at Bhaskar, Patrika, Pratahkal, Punjab Kesari, and Times. Arpit completed his schooling in Udaipur and Jaipur. He has been working in the media industry for more than 10 years, and his journey is still continuing. ✍️📚
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