Sovereign Gold Bond Redemption Price Set: RBI Announces Early Redemption Details
MAS Team | 10 August 2023
Share
0
The Reserve Bank of India (RBI) has disclosed the redemption price for the premature withdrawal of Series I of Sovereign Gold Bonds (SGB) 2016-17. Launched for subscription from July 18 to 22 in 2016, this series was initiated at an issue price of Rs3119 per gram of gold.
 
As per an RBI notification dated July 28, 2023, the redemption price for early withdrawal has been fixed at Rs5950. The next scheduled date for the early redemption of this particular tranche is set for August 05, 2023, as announced by the RBI.
 
In accordance with this, the redemption price for Sovereign Gold Bonds will be determined based on the simple average of the closing gold price of 999 purity during the preceding week (Monday-Friday) before the redemption date. This information is sourced from the India Bullion and Jewellers Association Ltd (IBJA). Consequently, the redemption price for the upcoming early redemption on August 05, 2023, stands at Rs5950/- per unit of SGB. This figure is based on the average closing gold price during the week of July 24-28, 2023.
 
Series I of SGB 2016-17 has proven to be a lucrative investment for investors, offering an impressive absolute return of approximately 91% over a span of 6.5 years. The Compound Annual Growth Rate (CAGR) is estimated at around 9.7%. Moreover, investors can also benefit from a 2.5% interest, which is paid on a half-yearly basis. This interest is calculated at a rate of 2.50% on the issue price and is directly credited to the investor's bank on account half-yearly basis.
 
Sovereign Gold Bonds, issued by the RBI on behalf of the government, are available for subscription by resident individuals, HUFs, Trusts, Universities, and Charitable Institutions. The scheme's duration spans eight years, with the option for premature withdrawal after the completion of 5 years, on the interest payment date.
 
For those interested the minimum permissible investment in Sovereign Gold Bonds starts at 1 gram of gold. The maximum subscription limits are capped at 4 Kg for individuals and HUFs, while trusts and similar entities have an allowance of up to 20 Kg per fiscal year (April-March) as defined by the Government.
 
In terms of taxation, the interest earned from Sovereign Gold Bonds is subject to full taxation. However, any profits garnered from the redemption of these bonds are completely exempt from taxation. In cases where the bonds are transferred or sold, the profits obtained are taxable based on the holding period, either as long-term or short-term gains. There's also the option to opt for a flat tax rate of 10% on the profit, if this proves to be more advantageous than indexing the capital gains. For those looking to further optimize their investments, the exemption under Section 54F can be utilized for long-term capital gains, by reinvesting the proceeds in a residential property within the stipulated time frame.
 
Dear Investor,
In case of any grievance / complaint :
  • Please contact Compliance Officer Shraddha Mhatre at [email protected] and Phone No. - 91-22-35131664.
  • You may also approach CEO Debashis Basu at email- id [email protected] and Phone No. - 91-22-35131664.