The Reserve Bank of India (RBI) has announced the pre-mature redemption price of Rs 9,221 per bond of Sovereign Gold Bond (SGB) Series III 2017-18. These bonds can be redeemed early from today (April 16, 2025). There’s one more chance for final redemption of the series later, as the SGB has an 8-year maturity period. Early redemption options are available twice a year after 5 years. The interest in SGBs is also paid twice semi-annually around the same time.
The redemption price of Sovereign Gold Bonds is calculated based on the average gold price of the three business days before redemption. This gold price data is provided by the India Bullion and Jewellers Association Ltd (IBJA).
How can investors get 211% tax-free returns on SGBs? RBI’s latest on SGB Series III 2017-18 explained
The RBI announced in a circular dated April 15, 2025: “The next due date of premature redemption of the Series III of SGB 2017-18 tranche shall be April 16, 2025. Further, the redemption price of SGB shall be based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on April 16, 2025, shall be Rs 9221 per unit of SGB based on the simple average of the closing gold price for the three business days, i.e., April 09, April 11, and April 15, 2025.”
Redemption of Sovereign Gold Bonds is exempt from capital gains tax for individual investors. Although this tax exemption is only for individuals and not for companies and HUFs, and others. Also, individuals don’t get this capital gains tax exemption if they sell their SGB on the stock market. Any interest earned from investing in SGBs is taxable for all.
The SGB Series III 2017-18 was originally issued at Rs 2,964 per Sovereign Gold Bond. A unit of SGB represents one gramme of gold. If we calculate, then the absolute return comes to:-
- Issue Price (2017): Rs 2,964
- Pre-mature Redemption Price (Apr 2025): Rs 9,221
- Absolute Gain per Unit: Rs 6,257
- Total Return (%): 211.1 per cent
- Interest Payout: 2.5 per cent p.a. (paid semi-annually)
- Tax on Redemption: No capital gains tax for individuals (if redeemed via the RBI window)
