Final SGB redemption today: 303% returns from this Sovereign Gold Bond tranche on October 30

The Reserve Bank of India (RBI) on October 29 announced the final redemption price for the Sovereign Gold Bond (SGB) Series-V due on October 30, 2025. Investors of this SGB will series will be able to book a profit of approximately 303%.

In a release, the central bank said that the final redemption price for 'SGB 2017-18 Series-V-Issue date October 30, 2017' shall be ₹11,992 per gram.

As per SGB scheme rules, the Gold Bond becomes repayable on the expiration of eight years from the date of issue. Accordingly, the final redemption date of SGB 2017-18 Series-V-Issue date October 30, 2017 shall be October 30, 2025.

"Further, the redemption price of SGB shall be based on simple average of closing price of gold of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for final redemption due on October 30, 2025, shall be ₹11,992/- (Rupees Eleven Thousand Nine Hundred and Ninety Two only) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., October 27, 2025, October 28, 2025, and October 29, 2025," the RBI said.

Sovereign Gold Bond (SGB) Series-V with settlement date October 30, 2017 was issued at a price of ₹2971 per gram. As the RBI has set the final redemption price at ₹11,992 per gram for this SGB tranche, investors will be able to make a gain of around 303% in just 8 years.

Will you have to pay tax on the redemption amount?

No. As per the RBI, the capital gains arising on redemption of these bonds to an individual is exempted from tax. This means you don't have to pay tax on the redemption amount.

"The interest on the Gold Bond shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of these bonds to an individual is exempted," RBI said in a notification on Sovereign Gold Bon Scheme dated October 06, 2017.

However, SGB investors are required to pay tax on the annual 2.5% interest on SGB investments.

Premature redemption

The RBI has also announced the price for premature redemption of 'SGB 2019-20 Series-VI-Issue date October 30, 2019'. It will be ₹11,992 per gram.

The premature redemption of SGB is allowed after fifth year from the date of issue on the date on which interest is payable. Accordingly, the next due date of premature redemption of the 'SGB 2019-20 Series-VI-Issue date October 30, 2019' tranche is October 30, 2025.

"Further, the redemption price of SGB shall be based on simple average of closing price of gold of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on October 30, 2025, shall be ₹11,992/- (Rupees Eleven Thousand Nine Hundred and Ninety Two only) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., October 27, 2025, October 28, 2025, and October 29, 2025," RBI said.