April SGB exit window opens: Which gold bonds are eligible, and how new income tax rules impact gains

Which SGBs are available for early redemption in April?

All these redemptions are scheduled across April 15, April 20, April 23, April 28, and April 30, giving investors multiple exit points within a short window.

For those planning to redeem, timing is crucial. Each tranche has a specific application window during which investors must submit their request through the Reserve Bank of India or via the Retail Direct platform.

These include the 2018–19 Series II (issued October 23, 2018), which can be redeemed on April 23, 2026. The 2019–20 Series V (October 15, 2019) will be eligible on April 15, followed by the 2019–20 Series VI (October 30, 2019) on April 30. From the 2020–21 issuances, Series I (April 28, 2020) will mature for early exit on April 28, while Series VII (October 20, 2020) will be redeemable on April 20, 2026.

Investors should note that early redemption is not automatic. You must submit a request within a specific window before the redemption date. For instance, investors in the 2019–20 Series V need to apply between March 14 and April 6, 2026, while those holding the 2018–19 Series II have a window from March 23 to April 13. Missing these timelines could mean waiting for the next opportunity or holding till maturity.

Investors must submit their redemption requests in advance, as per the timelines specified by the RBI.

SGB taxation changes from April 1, 2026

SGBs come with an eight-year maturity, but investors have historically had the flexibility to exit early. After completing five years from the date of issue, investors could opt for premature redemption. Whether investors held these gold bonds until maturity or chose to redeem them after five years, the capital gains were completely tax-free. This was probably one of the reasons why SGBs became popular among long-term investors.

Under the new rules, which will come into effect from April 1, 2026, tax exemption will no longer apply to all early redemptions. Instead, only those investors who bought SGBs at the time of initial issuance and hold them until full maturity (eight years) will continue to enjoy tax-free capital gains.

This means investors opting for early redemption after the five-year lock-in may now have to pay capital gains tax, reducing the overall return from the investment.

Suppose you invested ₹1 lakh in an SGB in 2020. By 2026, if the value rises to ₹1.5 lakh and you choose early redemption after five years, the ₹50,000 gain will be fully tax-free. Under the new rules, this gain could now be taxable. If you hold the bond until its 2028 maturity, your entire gain stays tax-free, as long as you invested in the original issue.

For long-term investors, staying invested until the eight-year maturity could be more rewarding, since capital gains at maturity remain tax-exempt.