Sovereign Gold Bonds (SGB) mature after 8 years from the date of issue. They are allowed to be redeemed after 5 years from the date of issue. This means that if an investor does not want to wait for 8 years, he can redeem his money after five years.
The Reserve Bank (RBI) has announced the pre-maturity redemption of 2019-20 Series X bonds. These bonds were issued on March 11, 2020 at Rs 4,260 per unit. RBI has fixed the redemption price at Rs 10,905 per unit. This is 1555.99 percent more than the issue price. This does not include the interest received during the investment period.
This installment of SGB came on March 11, 2020
RBI issued a statement in this regard on September 10. It said, ” The date of redemption before maturity of SGB 2019-20 Series X tranche issued on March 11, 2020 will be September 11, 2025.” The redemption price is determined based on the simple average of the closing price of gold on September 8, 9, and 10, 2025. This closing price is released by the India Bullion and Jewelers Association (IBJA).
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The maturity period of SGB is 8 years
Sovereign Gold Bonds (SGB) mature after 8 years from the date of issue. They are allowed to be redeemed after 5 years from the date of issue. This means that if an investor does not want to wait for 8 years, he can withdraw his money (redemption) after five years. Repayment is done on the next date of interest payment.
SGB scheme was started in 2015
The Sovereign Gold Bond Scheme was started in 2015. The government started this scheme to give investors the option of investing in physical gold. RBI issues these bonds to investors on behalf of the central government. Investors benefit in two ways in this scheme. First, they get 2.5 percent interest annually on the investment amount. Second, they get the benefit of capital gains according to the price of gold at the time of maturity.
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Investors got the option to invest in physical gold
The SGB scheme has received a good response from investors. The government started the SGB scheme to give an option to people who invest in physical gold such as gold jewellery, coins, bars etc. Due to people investing more in physical gold, the government has to import more gold. The government has to spend foreign currency on the import of gold. But, after the sharp rise in gold prices in the last 1-2 years, the government has not released a new installment of SGB.
The scheme is quite attractive from tax point of view
Investing in SGB is very beneficial from the tax point of view. Under Section 43 of the Income Tax Act, the interest earned on SGB is taxable. However, the capital gains made by investors on redemption of these bonds are not taxable. If SGB is sold through the exchange’s platform, then indexation benefit is available on the capital gains made from it.
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