Golden gains day for SGB 2018–19 Series IV investors as RBI opens premature exit; check details

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• Premature redemption price for SGB 2018–19 Series IV set at Rs 13,486 per unit
• Investors redeeming on Jan 1, 2026 get Rs 13,486 per unit plus final interest.
• Premature redemption gains are taxable; maturity gains are tax-free

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The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2018–19 Series IV for today, i.e. January 1, 2026.  The tranche was originally issued on January 1, 2019. It is therefore eligible for premature redemption in line with the five-year lock-in rule under the SGB scheme.

Premature redemption date explained

As per the Government of India notification dated October 8, 2018, premature redemption under the Sovereign Gold Bond Scheme is permitted after the completion of five years from the date of issue, and only on dates when interest is payable.

The SGB 2018–19 Series IV tranche was issued on January 1, 2019. Accordingly, it completes five years on January 1, 2024, and becomes eligible for premature redemption on an interest payment date. Based on this rule, the due date for premature redemption is January 1, 2026.

Redemption price of Sovereign Gold Bond (SGB) 2018–19 Series IV announced

The redemption value of Sovereign Gold Bonds-- whether on maturity or premature exit is linked to prevailing gold prices.

For the premature redemption due 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).

The premature redemption price has been fixed at Rs 13,486 per unit of SGB, based on gold prices for December 29, 30, and 31, 2025.

Each SGB unit represents one gram of gold.

What investors will receive

Investors opting for premature redemption on January 1, 2026, will receive:

• Rs 13,486 per unit credited directly to their registered bank account
• The last interest payout, calculated at 2.5% per annum on the original issue price

It is worth noting that the redemption proceeds are paid in cash; no physical gold is delivered.

Returns and tax implications

Apart from benefiting from the rise in gold prices over the years, investors would have earned:

2.5% annual interest, paid semi-annually (taxable as per income slab)

Interestingly, unlike final maturity, capital gains from premature redemption are taxable. Long-term capital gains tax rules apply if the bonds are held for more than three years, with indexation benefits available.

What return do SGB 2018–19 Series IV investors get?

Investors who bought SGB 2018–19 Series IV at the issue price of Rs 3,214 per gram in January 2019 and opt for premature redemption on January 1, 2026 at Rs 13,486 per gram will see a price gain of Rs 10,272 per unit, translating into an absolute return of about 320% over seven years. This works out to an annualised return of nearly 20%, purely from gold price appreciation.

Should investors opt for premature redemption?

Premature redemption offers liquidity to investors who may need funds or want to rebalance their portfolio at the start of the New Year. However, those who do not require immediate liquidity may choose to stay invested until the full eight-year maturity to benefit from tax-free capital gains on final redemption.

How premature redemption works

SGBs have an 8-year tenure, but investors are allowed to exit early starting the 5th year—only on the dates when semi-annual interest is paid. Premature redemption must be initiated through the investor’s bank, post office, or agent from whom the bond was purchased, typically with a request submitted several days in advance.