The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2018–19 Series IV, which is due for early exit today, January 1, 2026. The tranche was originally issued on January 1, 2019, making it eligible for premature redemption under the five-year lock-in rule of the SGB scheme.
Premature redemption explained
As per a Government of India notification dated October 8, 2018, premature redemption of Sovereign Gold Bonds is permitted after completion of five years from the date of issue, and only on dates when semi-annual interest is payable.
Since SGB 2018–19 Series IV completed five years on January 1, 2024, it became eligible for premature redemption on a subsequent interest payment date. Accordingly, January 1, 2026, is the applicable premature redemption date for this tranche.
Redemption price announced
The redemption value of SGBs—whether at maturity or premature exit—is linked to prevailing gold prices.
For the premature redemption scheduled on January 1, 2026, the price has been calculated based on the simple average of the closing price of gold of 999 purity for the previous three business days, as published by the India Bullion and Jewellers Association (IBJA).
Based on gold prices for December 29, 30, and 31, 2025, the premature redemption price has been fixed at ₹13,486 per unit.
Each unit of Sovereign Gold Bond represents one gram of gold.
What investors will receive
Investors opting for premature redemption today will receive:
- ₹13,486 per unit, credited directly to their registered bank account
- Final interest payment, calculated at 2.5% per annum on the original issue price
The redemption amount is paid entirely in cash; no physical gold is delivered.
Returns and tax treatment
Apart from gold price appreciation, SGB investors earn:
- 2.5% annual interest, paid semi-annually (taxable as per the investor’s income tax slab)
Unlike redemption at full maturity, capital gains arising from premature redemption are taxable. If the bonds are held for more than three years, long-term capital gains tax applies, with indexation benefits available.
What return did investors earn?
Investors who purchased SGB 2018–19 Series IV at the issue price of ₹3,214 per gram in January 2019 and opt for premature redemption at ₹13,486 per gram will realise a price gain of ₹10,272 per unit.
This translates into an absolute return of around 320% over seven years, equivalent to an annualised return of nearly 20%, driven purely by gold price appreciation, excluding interest income.
How premature redemption works
Sovereign Gold Bonds have an 8-year tenure, but investors are allowed to exit early starting from the fifth year, only on interest payment dates.
To redeem prematurely, investors must submit a request through the bank, post office, or agent from whom the bonds were purchased, typically a few days in advance of the redemption date.
Quick Read
Redemption date: January 1, 2026
Redemption price: ₹13,486 per unit
Eligibility: After 5 years, only on interest dates
Tax: Capital gains taxable on premature exit
Payment mode: Cash credited to bank account
