Premature SGB redemption today offers investors nearly 273% absolute return

SGB

• RBI sets SGB 2019-20 Series X redemption price at Rs 15,920/unit
• Investors see returns of 273.7% to 278% excluding interest
• Tax-free status for premature redemption ends from April 1, 2026

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The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond 2019–20 Series X, which was issued on March 11, 2020. The premature redemption of an SGB series is permitted after the fifth year from the date of issue of such gold bonds on the date on which interest is payable.

What is the premature redemption price for SGB 2019-20 Series-X?

The premature redemption price for the Sovereign Gold Bond 2019–20 Series X, due on March 11, 2026, has been set at Rs 15,920 per unit. The price has been calculated based on the simple average of the closing gold price over the last three business days—March 6, March 9, and March 10, 2026.

At this redemption price, investors who subscribed to the bonds at the original issue price of Rs 4,260 per gram in March 2020 would earn an absolute return of around 273.7 percent. Those who purchased the bonds at the discounted online price of Rs 4,210 per gram would see gains of about 278 percent, excluding the interest earned during the holding period.

When the bonds were issued in March 2020, the government offered a Rs 50 per gram discount to investors who applied online and made the payment through digital modes.

The bonds carry an interest rate of 2.50 percent per annum, calculated on the initial investment amount. The interest is credited to the investor’s bank account semi-annually, with the final interest payment made at the time of maturity along with the principal amount.

What is the tax structure?

Under the rules applicable till March 31, 2026, investors redeeming Sovereign Gold Bonds through the RBI’s premature redemption window after five years are exempt from capital gains tax.

However, the tax treatment will change from the new financial year starting April 1. As per Budget 2026, only original subscribers who purchased SGBs during the primary issuance will be eligible for tax-free provided they hold it till maturity. Premature redemptions are not eligible for tax free status.

Investors who acquired SGBs from the secondary market will no longer enjoy this exemption, even if they hold the bonds until maturity.