The Reserve Bank of India (RBI) has fixed the premature redemption price for Sovereign Gold Bond (SGB) 2019-20 Series V at ₹14,725 per gram, with redemption due on October 15, 2026. According to RBI's announcement, the redemption price is based on the simple average of closing prices of 999-purity gold for the three business days of October 12, 13, and 14, 2026. The SGB 2019-20 Series V was issued at ₹3,788 per gram for investors who applied online and paid through digital modes, while offline investors paid ₹3,738 per gram. The window for submitting premature redemption requests for this tranche closed on October 5, 2026, making the announced price relevant only for investors whose redemption requests were submitted within the prescribed period.
At the announced redemption price, investors stand to gain ₹10,937 to ₹10,987 per gram, representing an absolute return of approximately 288.72% to 293.93% of their original investment. For an investor who purchased SGBs worth ₹37,880 for 10 grams at the original issue price of ₹3,788 per gram, the bond will be worth approximately ₹1,47,250 upon premature redemption, excluding interest earned during the holding period. This translates to a percentage return of 288.72% for offline subscribers and 293.93% for online subscribers when calculated as (₹10,987 ÷ ₹3,738) × 100. Investors who purchased at the discounted price of ₹3,738 per gram would enjoy a slightly lower but still substantial capital appreciation of approximately 288.8%.
Beyond the capital gains, Sovereign Gold Bonds carry interest at 2.5% per annum on the original investment amount, payable semi-annually. On an initial investment of ₹37,880 for 10 grams at the original issue price, this amounts to ₹947 annually, or approximately ₹6,629 over seven years, assuming the bonds were held throughout the period and all scheduled interest payments were received. For online investors who paid ₹37,380 for 10 grams, the annual interest would be ₹934.50, totaling approximately ₹6,541.50 over seven years. This interest is additional to the capital gain from redemption.
Budget 2026 changes mean premature redemption is no longer eligible for the capital gains tax exemption. The Finance Act, 2026, effective April 1, 2026, restricts the capital gains exemption to individuals who subscribed to SGBs at the original issue and held them continuously until the eight-year maturity date. Consequently, gains on premature redemption may attract long-term capital gains tax at 12.5%, without indexation. Interest income is taxable separately at the investor's applicable income-tax slab rate. This represents a significant change from previous tax treatment, as premature redemption was previously exempt from capital gains tax.
Under the Sovereign Gold Bond Scheme, premature redemption is permitted after the fifth year from the date of issue, on an interest payment date. Since this tranche was issued on October 15, 2019, the applicable premature redemption date is October 15, 2026. The redemption price is determined using the simple average of closing prices of 999-purity gold for the three preceding business days, as published by the India Bullion and Jewellers Association Ltd. (IBJA). The SGB 2019-20 Series V was issued at ₹3,788 per gram for online investors and ₹3,738 per gram for offline investors, with a ₹50 per gram discount available to digital applicants. Apart from SGB 2019-20 Series V, three other SGB tranches are scheduled for premature redemption in October 2026, with SGB 2020-21 Series VII eligible on October 19, SGB 2020-21 Series I on October 28, and SGB 2019-20 Series VI on October 30.
