Sovereign Gold Bond 2020-21 Series-I: RBI announces premature redemption price, investors to get 166% returns

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The Reserve Bank of India (RBI) has announced the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-I date October 28, 2020. According to an official statement by the RBI, investors will receive the option to redeem the SGB tranche prematurely from today, i.e October 28, 2025. Additionally, a statement by the Central bank has clarified that the premature redemption of the SGB series will be permitted after the fifth year from the date of issue of such gold bonds on the date on which interest is payable.

The statement further added that the redemption price will be calculated using the simple average closing price of gold (999 purity) based on data from the India Bullion and Jewellers Association (IBJA).

Know the redemption price for SGB 2020-21 Series-I

The Reserve Bank of India has announced that the premature redemption price for the Sovereign Gold Bond (SGB) 2020-21 Series-I, due on October 28, 2025, will be Rs 12,198 per unit.

This price is based on the simple average of gold’s closing prices over three business days — October 23, 24, and 27, 2025.

When this series was first issued, investors who applied online paid Rs 4,589 per gram, while those who bought offline paid Rs 4,639 per gram.

At the current redemption value, the bonds will deliver an impressive absolute return of nearly 166% for online investors. In rupee terms, the gain works out to Rs7,609 per gram (Rs12,198 - Rs4,589) — and that’s without even including the annual interest these bonds earned over the years.

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.

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.