204% gains on Sovereign Gold Bond 2020-21 Series-VII if you prematurely redeem it today

The government has announced the second premature redemption date for the Sovereign Gold Bonds (SGB 2020–21 Series VII, issued on October 20, 2020), setting it for April 20, 2026 (Monday).

“In terms of GOI notification F.No.4(4)-B(W&M)/2020 dated October 09, 2020 (SGB 2020–21 Series VII, issue date October 20, 2020) on the Sovereign Gold Bond Scheme, premature redemption of Gold Bonds may be permitted after the completion of five years from the date of issue, on the interest payment date,” the Reserve Bank of India (RBI) stated in a release dated April 17, 2026.

So, as per the stipulated criteria, the next redemption date for the said SGB issue becomes due on April 20, 2026.

The centre has also notified the redemption price as ₹15,254 per unit of SGB based on the simple average of the closing price of gold for the three business days, i.e., April 15, April 16, and April 17, 2026.

The redemption price of SGB is based on a simple average of the closing price of gold of 999 purity of the previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).

The SGB issue was issued at a price of ₹5,015 per unit, and given the redemption price, it will bear a return of 204% to its investors who redeem it prematurely.

In accordance with the criteria mandated by the RBI, after the completion of the 5-year tenure, the given SGB issue first became due for premature redemption on October 20, 2025.

What changed for SGBs in the Union Budget 2026?

Unlike in the past, the SGBs now do not enjoy a complete tax-free status. This means that investors who bought the financial instrument from the RBI and continue to hold it until the stipulated maturity time of 8 years will continue to take the benefit of tax-exempt status. Nonetheless, those who bought the instrument from the secondary market will now need to pay capital gains tax. The new rule applies with effect from April 1, 2026.