The Reserve Bank of India (RBI) has opened premature redemption for SGB 2019-20 Series VIII at ₹14,170 per unit from July 21, 2026, marking the completion of five years from the bond issuance date. According to RBI guidelines, investors can redeem their investment prematurely after five years from the bond issuance date on the coupon payment date. The bond was originally issued for subscription on January 21, 2020, with the settlement date on January 23, 2020. As per The Financial Express, investors who wish to redeem must submit their request through the bank, post office, Stock Holding Corporation of India Ltd. (SHCIL) or authorised agent from whom they purchased the bonds, within the prescribed timeline. The redemption price is paid in cash and investors will stop earning the bond's fixed 2.5% annual interest after redemption.
The premature redemption price has been set at ₹14,170 per unit by the RBI, calculated based on the simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days from the redemption date. The closing prices of 999 purity gold for July 16, July 17, and July 20, 2026 were considered for computation. Considering the redemption price at ₹14,170, investors will be able to make an absolute return of 257%, representing an annualized return of over 22% over the five-year investment period. At the redemption price of ₹14,170, investors who bought at the issue price stand to make an absolute gain of ₹10,204 per unit, translating into a return of about 257.3% over the original investment. The absolute return comes to be ₹14,170 - ₹3,966 = ₹10,204 (without factoring in interest), representing 257.6% return in percentage terms. For practical examples, an investment of ₹1 lakh would be worth ₹3.57 lakh at current redemption rates, excluding the 2.5% annual interest paid by the government.
The SGB issue was priced at ₹3,966 per gram for online subscribers, while offline investors paid ₹4,016 per gram, as online subscribers received a ₹50 per gram discount. According to the RBI notification, the maturity term or tenure of these bonds is 8 years. For comparison, the RBI allowed premature redemption on July 21 for SGB 2018-19 Series-V, with the same redemption price of ₹14,218 per unit, making investors in that series eligible for a maximum return of 350%. Investors who applied online and paid digitally had purchased the bonds at a discounted price of ₹3,214 per gram, for whom the appreciation works out to ₹1,104 per gram, or about 350.1%. Gold price in India is ₹14,288 per gram as of July 21, having gained ₹111 per gram over the previous day's close.
The SGBs issued in the 2019-20 Series VIII bear interest at the rate of 2.50% per annum (fixed rate) on the amount of the initial investment, with interest credited semi-annually to the investor's bank account and the last interest payable on maturity along with the principal. Under the Income-tax Act, 2025, capital gains on redemption remain exempt only where the investor subscribed to the bond at its original issuance and holds it until maturity. If the bond is redeemed before maturity, the capital gains are taxable. However, a significant change has been introduced in Budget 2026 regarding SGB taxation. As per The Financial Express, capital gains from gold bonds will be exempt from tax if the bond was purchased during primary issuance and held for a full 8 years until maturity. Premature withdrawal through the RBI does not qualify for this exemption. Bonds acquired from the secondary market do not qualify for the exemption at maturity and any capital gains are taxable under the applicable provisions. Investors should verify their mode of acquisition and the timing of redemption before exercising the premature redemption option.
