Gold Bond 2020-21 Series XII due for premature redemption today; investors see 248% gain

The Sovereign Gold Bond Scheme (SGB) 2020–21 Series XII will be available for premature redemption on Monday, March 9, as it enters its fifth-year redemption window under Government of India guidelines.

Investors holding the bond are likely to realise a capital gain of around 248% over the original issue price of ₹4,612 per unit for online investors.

The redemption price for the bond has been set at ₹16,063 per unit, calculated as the simple average of gold’s closing prices on March 4, 5 and 6, 2026, based on data from the India Bullion and Jewellers Association Ltd (IBJA).

Offline subscribers paid an issue price of ₹4,662 per unit, resulting in similar gains. These figures exclude the 2.5% annual interest paid during the holding period.

Previously, Soverign Gold Bonds 2020–21 Series VI reached its premature redemption date on March 7, 2026, under similar provisions.

Capital Gains Tax on SGBs

The Union Budget 2026 proposes changes to SGB tax treatment, distinguishing between primary subscribers and secondary-market buyers.

Effective April 1, 2026, the capital gains tax exemption on SGBs redeemed at maturity will apply only to investors who subscribe at the primary issuance by the RBI and hold the bonds until maturity.

Investors who acquire SGBs from stock exchanges or other holders in the secondary market will not be eligible for tax-free redemption, even if they hold the bonds until maturity, as per the Budget proposal.

What is a Sovereign Gold Bond (SGB)? Who issues it?

Sovereign Gold Bond Scheme (SGBs) are government securities denominated in grams of gold and serve as an alternative to holding physical gold. Investors pay the issue price in cash, and the bonds are redeemed in cash at maturity based on the prevailing gold prices.

These bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.

What interest do SGBs pay and how is it paid?

SGBs offer a fixed interest rate of 2.5% per annum on the amount of the initial investment. The interest is credited semi-annually to the investor’s bank account. The final interest payment is made along with the principal amount at maturity.

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