SGB premature redemption today: ₹1 lakh investment rises to ₹3.04 lakh as RBI fixes exit price at ₹15,384 per gram

The Reserve Bank of India (RBI) has fixed the premature redemption price of Sovereign Gold Bond (SGB) 2020-21 Series VI at ₹15,384 per gram, giving investors in the tranche a capital appreciation of about 204% over the original online issue price. The redemption is available from 8 September 2026, five years after the bond was issued.

The SGB 2020-21 Series VI was issued on 8 September 2020 at ₹5,117 per gram. Investors who subscribed online and paid digitally received a ₹50-per-gram discount, taking their effective issue price to ₹5,067 per gram.

How much return has the SGB generated?

For an investor who bought the bonds online at ₹5,067 per gram, the capital gain at the premature redemption price of ₹15,384 is:

₹15,384 − ₹5,067 = ₹10,317 per gram

The percentage gain is:

₹10,317 ÷ ₹5,067 × 100 = 203.61%

This rounds to 203.6%, or about 204%.

On a proportional basis, an initial investment of ₹1 lakh would correspond to a redemption value of about ₹3.04 lakh, before considering the interest received during the holding period.

The calculation is:

₹1,00,000 × ( ₹15,384 ÷ ₹5,067) = ₹3,03,612

Therefore, the gain from the increase in the gold-linked value would be about ₹2.04 lakh on a proportional ₹1 lakh investment.

Investors also earned 2.5% annual interest

The 204% figure does not include the interest paid on SGBs.

SGB 2020-21 Series VI carries an interest rate of 2.5% per annum on the initial investment, with interest paid every six months.

For illustration, an investor who initially held SGBs worth ₹1 lakh would have received approximately ₹2,500 a year, or around ₹15,000 over six years, assuming the full six-year period and no change in the principal used for the interest calculation.

Thus, the overall economic return for the original investor is higher than the 204% capital appreciation figure because the investor also received periodic interest.

How was the ₹15,384 redemption price calculated?

The RBI said the premature redemption price is based on the simple average of the closing price of 999-purity gold for the three business days preceding the redemption date, as published by the India Bullion and Jewellers Association (IBJA)

For the 8 September 2026 redemption, the three relevant business days were 3 September, 4 September and 7 September 2026. The resulting redemption price was fixed at ₹15,384 per SGB unit, equivalent to one gram of gold.

IBJA's published gold data also shows that gold prices were substantially higher in September 2026 than when this SGB tranche was originally issued.

Why can investors redeem the bond now?

SGBs have an original tenor of eight years, but the scheme permits premature redemption after the fifth year from the issue date, and the exit can be exercised on an interest payment date. The Series VI was issued on 8 September 2020, making 8 September 2026 an eligible premature-redemption date.

The scheduled final maturity of this tranche is 8 September 2028, meaning investors choosing premature redemption are exiting roughly two years before the eight-year maturity.

Tax treatment has changed

Investors should also distinguish between premature redemption and maturity.

The 2026 Budget changed the capital-gains exemption for SGBs. Under the amended provision, the exemption is available where an individual subscribed to the SGB at the time of original issue and holds it continuously until maturity. The Finance Bill specifically replaced the earlier provision to extend this condition to subsequent SGB schemes.

This means investors redeeming the Series VI prematurely should not assume that the capital gain is automatically tax-free simply because the instrument is an SGB. The revised exemption is tied to holding the bond until maturity.

The interest received from an SGB is separate from the capital gain and remains taxable according to the applicable tax rules.