Sovereign Gold Bonds: RBI announces premature redemption; investors to get 156% return

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The Reserve Bank of India (RBI) has announced premature redemption of the 2019-20 Series X bonds, issued on March 11, 2020, at Rs 4,260 per unit.

The RBI has fixed the redemption price at Rs 10,905 per unit per unit on September 11, 2025, which is a 155.99% gain over the issue price of Rs 4,260. However, this does not include the interest income earned during the holiday period.

In an official statement issued on September 10, the RBI said, “the due date of premature redemption of the (SGB 2019-20 Series-X – Issue date March 11, 2020) tranche shall be on September 11, 2025."

The simple average of the closing gold prices for the three business days of September 8, 9, and 10, 2025, as reported by the India Bullion and Jewellers Association (IBJA), was used to determine the redemption price.

In accordance with the SGB plan, the gold bonds mature after eight years since they were issued. However, after five years from the bond's issuance date, early redemption of the bonds may be allowed; these repayments will be made on the next interest payment date.

The latest development has come after RBI announced the premature redemption of SGB 2020-21 Series VI on September 8, 2020.

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.

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.