The Reserve Bank of India (RBI) has started the final redemption process for the Sovereign Gold Bonds (SGB) 2017-18 Series VI, which were issued on November 6, 2017.
These bonds will mature on November 6, 2025, marking the completion of their eight-year tenure.
The redemption price has been fixed at ₹12,066 per unit, giving investors a return of about 316.78% over the issue price of ₹2,895.
This figure does not include the 2.5% annual interest earned during the investment period.
Discounts and Returns on Online Payments
When the bond was first issued, investors who paid online received a ₹50 discount, reducing the actual issue price to ₹2,845 per unit.
This means the total return stands at approximately 324.11%, helped by the steady rise in gold prices over the years.
How RBI Decides the Redemption Price
According to the RBI, SGBs mature eight years from the date of issue.
The redemption price for Series VI is calculated based on the average closing price of gold (999 purity) published by the India Bullion
and Jewellers Association (IBJA) over three business days — October 31, November 3, and November 4, 2025.
Premature Redemption Rules
As per the scheme, investors can redeem their bonds early on any interest payment date after five years.
However, most investors hold the bonds till maturity because capital gains at redemption are completely tax-free.
Taxation Rules for SGBs
The 2.5% annual interest earned on these bonds is taxable under the Income Tax Act.
But the capital gains received at maturity are exempt from tax.
If an investor sells the bonds before maturity, long-term capital gains (LTCG) are taxed with indexation benefits, which reduce the overall tax burden.
Interest Rate and Key Benefits
SGBs provide a fixed 2.5% annual interest rate, paid every six months directly to the investor’s bank account.
This interest is unaffected by gold price fluctuations, offering a steady income in addition to potential price appreciation.
Purpose of the Sovereign Gold Bond Scheme
The SGB scheme was launched in November 2015 to give investors a safe and easy alternative to physical gold.
Issued by the RBI on behalf of the Government of India, these bonds are denominated in grams of gold.
Investors gain two-fold benefits —
Capital appreciation from rising gold prices, and
A fixed 2.5% annual interest.
The scheme also aimed to reduce India’s gold imports and encourage financial investments within the country.
Why the SGB Scheme Was Discontinued
The government stopped new SGB issues in October 2023 after achieving the program’s main objectives.
Rising management costs and the increasing popularity of Gold ETFs and digital gold also contributed to this decision.
However, all previously issued bonds remain valid.
Investors can hold them till maturity or redeem early as per the rules.
Currently, SGBs can only be purchased from the stock exchange.
