RBI’s ₹14,170 SGB Redemption Price Delivers 257% Returns for 2019-20 Series VIII Investors

The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond (SGB) 2019-20 Series VIII. Investors holding this tranche can opt for premature redemption from July 21, 2026, subject to RBI guidelines.

The redemption price has been fixed at ₹14,170 per unit. The valuation is based on the simple average of the closing prices of 999 purity gold over the last 3 business days preceding the redemption date.

SGB 2019-20 Series VIII Premature Redemption Details

Under the Sovereign Gold Bond scheme, premature redemption is allowed after 5 years from the date of issue, provided it coincides with an interest payment date. RBI determines the redemption value using the simple average of the closing price of 999 purity gold for the previous 3 business days.

These gold prices are published by the India Bullion and Jewellers Association (IBJA). For the current redemption window, the calculation has resulted in a redemption price of ₹14,170 per gram for SGB 2019-20 Series VIII investors.

SGB 2019-20 Series VIII Returns for Investors

The SGB 2019-20 Series VIII tranche was issued at ₹3,966 per gram for investors who applied through the online mode. Based on the redemption price of ₹14,170 per gram, investors have earned an absolute gain of ₹10,204 per gram.

This translates into an absolute return of approximately 257.29%, excluding the annual interest earned during the holding period. For offline subscribers, the issue price was ₹4,016 per gram, as online applicants received a discount of ₹50 per gram from the government.

How ₹1 Lakh Invested in SGBs Grew Over Time

An investor who subscribed to the online issue with an investment of ₹1 lakh would have purchased units at the issue price of ₹3,966 per gram. Based on the premature redemption value of ₹14,170 per gram, the investment would be worth around ₹3.57 lakh.

This growth is solely due to the appreciation in gold prices during the holding period. The calculation does not include the additional 2.5% annual interest paid by the government on Sovereign Gold Bonds.

Sovereign Gold Bond Tax Rules After April 1

Tax treatment for Sovereign Gold Bonds has undergone changes from April 1. Investors opting for premature redemption are now required to pay capital gains tax, including those who originally subscribed to the bond during the primary issuance.

The capital gains tax exemption at maturity remains available only to original subscribers who hold their SGBs until the end of the 8-year tenure. Investors who purchased SGBs through the secondary market are no longer eligible for tax-free redemption, even if they retain the bonds until maturity.

Read More: RBI Fixes SGB Redemption at ₹14,158, SGB 2020-21 Series X Delivers 177% Returns.

Want to track these market movements in Hindi? Visit Angel One News for daily updates and comprehensive share market news in Hindi.

Conclusion

The RBI has fixed the premature redemption price of SGB 2019-20 Series VIII at ₹14,170 per gram, effective from July 21, 2026. The tranche has generated an absolute return of about 257% for online subscribers based on the issue and redemption prices.

Investors have also benefited from the 2.5% annual interest paid during the bond's tenure. At the same time, revised tax rules have altered the tax treatment of SGB redemptions, making capital gains taxation an important consideration for eligible investors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.