The Reserve Bank of India (RBI) has allowed premature redemption of Sovereign Gold Bonds 2018-19 Series III and SGB 2017-18 Series VII today, November 13, 2023. Early redemption is permitted after the fifth year from the issue date, aligning with the interest payment date. The premature redemption price has been set at Rs 6,029.
Another upcoming due date for premature redemption is November 17, 2023, for SGB 2016-17, Series III, as per RBI release. The redemption price has been calculated based on the simple average closing gold price for the week preceding the redemption date. For the impending redemption on November 17, 2023, the redemption price is set at Rs 6050 per unit of SGB. This price is determined from the simple average of closing gold prices for the week of November 06 to November 10, 2023, as published by the India Bullion and Jewellers Association Ltd (IBJA).
Sovereign Gold Bonds provide advantages over physical gold investments, including exemption from making charges, storage costs, and purity concerns. Additionally, no tax is imposed on redemption after the maturity period. Till maturity, these bonds offer a 2.50 per cent annual interest rate, credited semi-annually to the investor's bank account. In addition to the interest is the return or appreciation of gold value. Outlook Money's analysis revealed Sovereign Gold Bonds' impressive performance, averaging a 17.35 per cent annual return over 11 recent premature redemptions or maturities.
The minimum investment is one gram, with a maximum subscription limit of 4 kg for individuals. While SGBs may have lower liquidity compared to physical gold, they are tradable on stock exchanges within a fortnight of issuance, as per RBI's notification.
Investors should be mindful of the taxation implications, as selling before 36 months may incur Short-Term Capital Gains tax based on the income tax bracket. Gold investments for over 36 months are considered long-term and taxed at 20 per cent post-indexation.
Investing in SGBs can be a relatively secure option, especially during inflation or uncertain economic times. It's worth noting that market forces influence gold prices and can fluctuate.
RBI also released the calendar for premature redemption of Sovereign Gold Bonds (SGBs) slated for coupon payment from October 2023 to March 2024. As shown in the calendar, 24 series are
scheduled for early redemption till March 2024. The list includes six SGBs with coupon payment dates set for 2024. Check dates here