The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-I, originally issued on October 28, 2020. Eligible investors can redeem their bonds prematurely from October 28, 2025, after completing the mandatory five-year lock-in period.
According to the RBI’s official statement, premature redemption is allowed after the fifth year from the date of issue, and only on interest payment dates.
🔸 Redemption Price Details
The RBI fixed the redemption price at ₹12,198 per gram of gold, based on the simple average closing price (999 purity) from the India Bullion and Jewellers Association (IBJA) for October 23, 24, and 27, 2025.
When the series was first issued, investors paid ₹4,589 per gram (online) and ₹4,639 per gram (offline). At the current redemption value, online investors will earn an absolute return of around 166%, excluding the annual 2.5% interest accrued over the holding period.
🔸 About the Sovereign Gold Bond (SGB) Scheme
Launched by the Government of India in November 2015, the SGB scheme offers investors a safe, interest-bearing alternative to physical gold. Issued by the RBI, these bonds are denominated in grams of gold and offer:
- 2.5% annual interest (paid semi-annually)
- Capital appreciation linked to gold market prices
Each bond carries an 8-year tenure, with an option for early redemption after 5 years. SGBs can also be traded, transferred, or used as collateral for loans.
🔸 Tax Benefits
As per the Income-tax Act, 1961, the interest on SGBs is taxable, but capital gains on redemption (after maturity or early exit) are exempt from tax. Transfers through exchanges are eligible for indexation benefits.
