RBI announces early redemption schedule for five SGB tranches in April; know tax implications

Sovereign Gold Bond

• RBI sets early redemption dates for five SGB tranches in FY27
• SGB redemptions before April 1, 2026, incur capital gains tax
• SGBs held for 8 years are tax-free for individuals

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Sovereign Gold Bond (SGB) investors planning an early exit in FY27 now have clarity on timelines. The Reserve Bank of India (RBI) has announced the premature redemption schedule for five SGB tranches that have completed the mandatory five-year lock-in period and will become eligible for early redemption in April.

SGBs are issued with an eight-year tenure but allow investors to exit after five years from the date of issue. The RBI publishes a list of eligible tranches every six months for investors who wish to redeem before maturity.

The tranches eligible for premature redemption in April are:

2018–19 Series II (issued October 23, 2018) – Redemption date: April 23, 2026

2019–20 Series V (issued October 15, 2019) – Redemption date: April 15, 2026

2019–20 Series VI (issued October 30, 2019) – Redemption date: April 30, 2026

2020–21 Series I (issued April 28, 2020) – Redemption date: April 28, 2026

2020–21 Series VII (issued October 20, 2020) – Redemption date: April 20, 2026

Investors must submit their redemption requests in advance, as per the timelines specified by the RBI.

Timeline for submitting the request for premature redemption

2018–19 Series II - March 23, 2026, to April 13, 2026

2019–20 Series V - March 14, 2026, to April 06, 2026

2019–20 Series VI - March 30, 2026, to April 20, 2026

2020–21 Series I - March 28, 2026, to April 18, 2026

2020–21 Series VII - March 20, 2026, to April 10, 2026

Taxation on SGB post April 1, 2026

However, the bigger development lies in the taxation change announced in Budget 2026. Until now, redemption of SGBs after five years, through the RBI’s premature redemption window, was exempt from capital gains tax for individual investors. This made the five-year exit option particularly attractive.

From April 1, 2026, this position will change. Premature redemptions will no longer automatically qualify for tax exemption under the revised rules. This means investors exiting after five years may now face capital gains tax, reducing the post-tax return advantage that SGBs previously offered in the early redemption window.

"Investors considering early exit from SCBs should note that the Reserve Bank of India’s announced five-year redemption window now comes with a tax caveat. Exiting early through the RBI window, or purchasing from the secondary market, will trigger capital gains tax, ending the previous incentive for trading based on gold price fluctuations," said Rahul Charkha, Partner, Economic Laws Practice.

However, long-term investors may benefit from staying invested until the full eight-year maturity. Capital gains arising on redemption at maturity will continue to remain tax-free for individual investors, preserving one of the key advantages of SGBs over physical gold and gold ETFs.

Advisors suggest that, unless there is an urgent need for funds, holding SGBs for the complete eight-year tenure could be more tax-efficient.

With gold prices remaining elevated and tax rules evolving, investors should evaluate their liquidity needs and post-tax returns carefully before making a redemption decision.