The premature redemption of the Sovereign Gold Bond (SGB) Scheme Series I of SGB 2018-19), falls on May 04, 2023. The Reserve Bank of India allows premature redemption of Gold Bond after the fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the first due date of premature redemption of the above tranche shall be May 04, 2023.
Premature redemption price of SGB
The redemption price for the premature redemption due on May 04, 2023 will be Rs 6054/- (Rupees Six thousand fifty-four only) per unit of SGB. The issue price was Rs 3064 (Issue period: Apr 16th, 2018 & Apr 20th, 2018). The absolute return will be 97.58% for 5-year tenure. While, coupon rate of 2.5% per annum which will be paid semi–annually.
Also read: Sovereign Gold Bonds: What is the minimum, maximum investment limit in SGB?
The tenor of the SGB will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates.
Calculation
The redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA). SGB based on the simple average of closing gold price for the last three days April 28, May 02 and May 03, 2023 (April 29, April 30 and May 01, 2023 being Saturday, Sunday and Holiday respectively).
Premature withdrawal
The bond's tenor is eight years, although, after the fifth year from the date of issuance, early encashment or redemption of the bond is permitted. If the bond is maintained in demat form, it can be traded on exchanges.
When can you prematurely withdraw Sovereign Gold Bonds?
In the event of an early redemption, investors can get in touch with the relevant bank, SHCIL offices, post office, or agent thirty days prior to the payment date. Only requests for premature redemption will be taken into account if the investor contacts the relevant bank or post office at least one day prior to the payment date.
Tax implications
The provisions of the Income-tax Act of 1961 (43 of 1961) will apply to the interest on the SGB. On the redemption of SGB to an individual, the capital gains tax that would have otherwise applied is now excluded. Bond transfers will result in long-term capital gains, eligible for indexation advantages.
Maximum limit
The maximum amount that may be subscribed is 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and other similar entities every fiscal (April-March), as may be from time to time announced by the Government. We'll get a self-declaration to that effect. The annual ceiling will encompass both secondary market purchases and bonds that were purchased at the government's initial issuance in various tranches.
