SGB offers 141% return: Sovereign Gold Bond 2020-21 Series-VIII opens for premature exit today; RBI shares details

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The Reserve Bank of India (RBI) has announced premature redemption price of Sovereign Gold Bond (SGB) 2020-21 Series-VIII. Investors holding this tranche of SGB will have the option to redeem their bonds prematurely on November 18, 2025. This marks the first opportunity for early exit as premature redemption is permitted only after the fifth year from the date of issue, and only on an interest-payment date. The central bank has fixed the redemption price at Rs 12,476 per unit for this tranche.

Sovereign Gold Bond (SGB) 2020-21 Series-VIII bonds were originally issued on November 18, 2020 under the Government of India notification F.No.4(4)-B(W&M)/2020.

How SGB redemption price is calculated

Under the SGB scheme, the redemption amount is calculated based on the simple average of the closing price of 999-purity gold for the previous three business days before the redemption date, as published by the India Bullion and Jewellers Association (IBJA).

For the November 18 redemption window, the price is based on IBJA gold rates for November 13, November 14 and November 17 of this year.

The average of these values results in a redemption price of Rs 12,476, which eligible investors will receive per SGB unit.

Investors to receive 141% return

The issue price for the SGB 2020-21 Series VIII (issued November 18, 2020) was set at Rs 5,177 per gram, based on the India Bullion & Jewellers Association (IBJA) average. Now, with the redemption price fixed at Rs 12,476, this translates to a gain of Rs 7,299 per gram.

In percentage terms, that’s an absolute return of about 141% ([(12,476 – 5,177) / 5,177] × 100).

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.

What is the Sovereign Gold Bonds scheme?

SGB Scheme was introduced by the Indian government in November, 2025 as an alternative to attract gold ownership. The bonds were issued by the RBI for and on behalf of the Centre. The bonds denominated in grams of gold offered investors dual benefit-- earning a fixed annual interest of 2.5% on the issue price and earning capital appreciation linked to gold prices. The scheme majorly aimed to reduce India’s reliability on imported physical gold, curb hoarding, and channel household savings into financial assets.

The bonds have a fixed term of eight years, but investors can exit after five years on interest payment dates if they wish. SGBs can also be traded on stock exchanges, transferred to others, or used as collateral for loans.

How Do Sovereign Gold Bonds Work?

If you want to invest in Sovereign Gold Bonds, all you need is to purchase Sovereign Gold Bond from either a bank, SHCIL or designated post offices. For offline purchases, an SGB certificate from the holding of the issuing bank or designated post offices is issued. You can collect it. In case you have purchased an SGB online, your demat account portfolio will reflect. The SGBs offer an interest of 2.5% per annum.

What is the tax treatment of Sovereign Gold Bonds

As per the provisions of the Income-tax Act, 1961 (Section 43 of 1961) the interest on the SGBs is taxable. When an individual redeems these bonds, they are free from paying capital gains tax. Any capital gains that result from the transfer of the bonds on the exchange will be eligible for the indexation benefits.