The Reserve Bank of India (RBI) on Saturday announced the premature redemption of Sovereign Gold Bonds 2017-18 Series V starting October 30, 2023. During the launch of the bonds, RBI had laid out the framework for early redemption from the fifth year, coinciding with the interest payment date. Accordingly, RBI has set the premature redemption date on October 30, 2023.
The redemption price has been set at Rs 6,079 per unit of SGB, determined based on the simple average of closing gold price for three business days, i.e., October 25-27, 2023, as published by the India Bullion and Jewellers Association Ltd (IBJA).
The gold bonds carry a fixed rate of 2.50 per cent per annum on the nominal value and will be repayable eight years from the date of their issue. The interest will be paid semi-annually, and the final interest payment will be made along with the principal upon maturity.
Sovereign Gold Bonds (SGBs) offer several advantages over physical gold investments. For example, they do not have making charges, storage costs, and purity issues. Moreover, there is no tax liability on redemption after the maturity period. Individuals can invest a minimum of one gram and a maximum of 4 kg worth of gold in SGBs. Although SGBs have lower liquidity than physical gold, they can be traded on the stock exchanges within a fortnight of issuance.
SGB investments are relatively safe even during inflation or uncertain economic times. However, it’s worth noting that market forces can influence gold prices.
Furthermore, these bonds can be sold, although liquidity is limited for redemption. If sold before 36 months, they will attract short-term capital gains tax based on your income tax bracket, and if held for over 36 months, long-term capital gains tax will apply, taxed at 20 per cent post-indexation.
RBI also released a calendar for premature redemption of SGBs slated for coupon payments from October 2023 to March 2024. A total of 24 series are scheduled for premature redemption till March 2024, as per the calendar. The list includes six SGBs with coupon payment dates set for 2024. Check dates here: https://business.outlookindia.com/invest/sovereign-gold-bonds-rbi-releases-calendar-for-early-redemption-till-march-2024.