SGB redemption: Sovereign gold bonds 2019-20 Series-III tranche delivers 347% returns on early exit

The Sovereign Gold Bond (SGB) 2019-20 Series-III is due for premature redemption today, February 13, with the redemption price of ₹15,641 per unit. This SGB tranche has delivered nearly 347% returns to investors against the booking price of ₹3,499 per gram. 

The SGB series was issued on August 14, 2019, and its premature redemption date was set to fall on February 14. However, as February 14 is a holiday (Saturday), the due date of premature redemption is February 13, 2026.

“In terms of GOI notification F.No.4(7)-B(W&M)/2019 dated May 30, 2019 (SGB 2019-20 Series-III-Issue date August 14, 2019) on Sovereign Gold Bond Scheme, premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the due date of premature redemption of the above tranche shall be on February 13, 2026 (February 14 being a holiday),” the Reserve Bank of India (RBI) said in a release on February 12.

Redemption price

The redemption price of SGBs is calculated based on the 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).

For this tranche, the RBI set the price for premature redemption at ₹15,641 per unit. “Further, the redemption price of SGB shall be 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). Accordingly, the redemption price for premature redemption due on February 13, 2026, (February 14 being holiday) shall be ₹15,641/- (Rupees Fifteen Thousand Six Hundred and Forty One only) per unit of SGB based on the simple average of closing price of gold for the three business days i.e., February 10, February 11, and February 12, 2026,” the release said. 

Return calculation

• Issue date: August 14, 2019
• Premature redemption date: February 13, 2026 
• Issue price: ₹3,499 per gram
• Early redemption price: ₹15,641 per gram
• Absolute return: ₹12,142
• Return calculation: (12,142 ÷ 3,499) × 100 = 347.01%

Investors who purchased the SGB 2019-20 Series-III in 2019 will book a profit of 347% if they redeem the units early.

Early redemption of SGBs

SGBs have a tenure of eight years, but they can be redeemed prematurely after 5 years from the date of issue. The RBI releases a list of SGB tranches eligible for redemption every six months. Importantly, SGBs can be redeemed early only on the dates on which interest is payable (usually every six months). 

In the near future, four more SGB tranches are due for premature redemption:

Tax on SGBs

Under the Finance Bill 2026, the tax exemption on capital gains will now apply only if the bonds were purchased originally, when they were issued and held continuously until maturity. SGBs bought in the secondary market or the ones redeemed prematurely will not be exempt from taxes. 

Note that the government paused the SGB scheme in the Union Budget 2025 due to rising gold prices, and isn’t likely to issue new tranches until they become cost-effective.