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  5. ₹1 lakh invested in this Sovereign Gold Bond is now worth over ₹3 lakh as RBI announces premature redemption price

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₹1 lakh invested in this Sovereign Gold Bond is now worth over ₹3 lakh as RBI announces premature redemption price

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By Sangeeta Ojha

3 min read | Updated on July 14, 2026, 08:42 IST

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SUMMARY

The Reserve Bank of India (RBI) has fixed the premature redemption price at ₹14,307 per gram for investors opting to redeem their Sovereign Gold Bond (SGB) 2020-21 Series IV on July 14, 2026.

₹1 lakh invested in this Sovereign Gold Bond is now worth over ₹3 lakh

The interest on the Gold Bond shall be taxable as per the provisions of the Income-tax Act. | Image: Shutterstock.

Investors who put around ₹1 lakh into the Sovereign Gold Bond (SGB) 2020-21 Series IV when it was launched in July 2020 have seen their investment nearly triple.

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The Reserve Bank of India (RBI) has fixed the premature redemption price at ₹14,307 per gram for investors opting to redeem their bonds on July 14, 2026.

A ₹1 lakh investment is now worth over ₹3 lakh

Since Sovereign Gold Bonds are issued in grams, an investor could not have invested exactly ₹1 lakh. The closest example is 21 grams, which cost ₹1,00,842 at the discounted online issue price of ₹4,802 per gram.

Here's how that investment has grown:

  • Investment amount (21 grams): ₹1,00,842

  • Premature redemption price: ₹14,307 per gram

  • Redemption value: ₹3,00,447

  • Capital gain: ₹1,99,605

Besides the capital appreciation, investors would have also received 2.5% interest annually, paid every six months, over the six-year holding period.

RBI announces premature redemption price

In a notification issued on Tuesday, the RBI said that SGB 2020-21 Series IV, which was issued on July 14, 2020, has completed five years. Under the Sovereign Gold Bond Scheme, investors are allowed to opt for premature redemption after the fifth year from the date of issue on an interest payment date. Accordingly, the next due date for premature redemption of this tranche is July 14, 2026.

The central bank said the redemption price has been fixed at ₹14,307 per unit (one gram).

As per the scheme, the redemption value is calculated based on the simple average of the closing price of 999 purity gold published by the India Bullion and Jewellers Association (IBJA) for the previous three business days. For this redemption, the price has been worked out using the IBJA gold prices for July 9, July 10 and July 13, 2026.

SGB 2020-21 Series IV issue price in 2020

The SGB 2020-21 Series IV was open for subscription from July 6 to July 10, 2020, with the bonds issued on July 14, 2020.

The issue price was ₹4,852 per gram. Investors who applied online and paid through digital mode received a ₹50 per gram discount, bringing their purchase price down to ₹4,802 per gram.

At the current redemption price, investors who bought the bonds online have earned a capital gain of ₹9,505 per gram, while those who subscribed at the regular issue price have gained ₹9,455 per gram, excluding the interest received during the holding period.

Tax treatment

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. If you redeem early through the RBI, original subscribers enjoy a capital gains tax exemption.
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About The Author

sangeeta-ojha.webp
Sangeeta Ojha is a business and finance journalist with experience across leading media platforms like Mint and India Today. She has built a reputation for covering a wide range of personal finance topics, including income tax, mutual funds, insurance, savings and investing.

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