RBI opens premature redemption window for sovereign gold bond 2020-21 series VII

The Sovereign Gold Bonds (SGB) 2020–21 Series VII has opened early redemption, offering over 200% returns as gold prices surge. The Reserve Bank of India fixed payout at ₹15,254 per unit for eligible investors

New Delhi: The Reserve Bank of India has opened a premature redemption window for holders of Sovereign Gold Bond (SGB) 2020-21 Series VII, with Monday set as the exit date, offering investors returns exceeding 200 per cent on their original investment.

The central bank has fixed the redemption price at Rs 15,254 per unit, calculated as the simple average of closing prices for 999-purity gold over the three preceding business days, according to the India Bullion and Jewellers Association (IBJA).

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Moreover, investors who subscribed at the original issue price of Rs 5,051 per unit stand to pocket capital gains of over 200 per cent. While those who applied online at issuance and availed a Rs 50 per gram discount have seen effective returns climb to nearly 205 per cent, excluding interest. SGB holders additionally earn 2.5 per cent annual interest, disbursed semi-annually over the holding period.

The tranche which was issued on October 20, 2020, became eligible for early redemption after completing five years, consistent with RBI guidelines permitting premature exit on interest payment dates post the fifth year.

The bonds carry a full maturity of eight years, though investors are not obligated to hold until final redemption. In addition, investors seeking to exit must submit their redemption request at the bank branch, SHCIL office or post office where the bonds were originally purchased.

Proceeds are automatically credited to the registered bank account on the redemption date. Investors with updated personal details such as bank account, mobile number or email are advised to notify their respective bank, post office, or Stock Holding Corporation of India Limited (SHCIL) ahead of the deadline to avoid settlement delays. However, capital gains treatment varies by holding period and investor category.

Under post-Budget 2026 rules, gains remain tax-exempt only for original subscribers redeeming at full maturity. Early or premature redemptions attract long-term capital gains tax if held beyond 12 months or slab-rate taxation for shorter holding periods.

Bonds acquired via the secondary market carry no capital gains exemption on redemption, and interest income remains taxable as per the investor’s applicable income slab in all cases. Notably, no fresh SGB issuances have been announced for FY2026-27, and the government has yet to release a new issuance calendar as of April 2026, leaving the future of the scheme uncertain.