SGB 2020-21 Series III Redemption Price Set At ₹14,774, Delivers 219% Returns

Investors in Sovereign Gold Bond (SGB) 2020-21 Series III have recorded strong gains following the Reserve Bank of India’s latest announcement. The central bank has fixed the premature redemption price at ₹14,774 per gram.

This marks a significant increase compared to the issue price of ₹4,627 for online investors. The redemption window opened on June 16, 2026, after completion of the required holding period.

What Is SGB 2020-21 Series III Redemption Price and Return?

The redemption price has been set at ₹14,774 per gram, compared to the issue price of ₹4,627 for online subscribers. This results in a gain of ₹10,147 per gram over the investment period.

The absolute return stands at 219.30%, reflecting the sharp rise in gold prices since June 2020. An investment of ₹1,00,000 at issuance would now be worth around ₹3.19 lakh, excluding interest income.

How Does SGB Premature Redemption After 5 Years Work?

SGB investors are allowed premature redemption only after completing 5 years from the date of issue. However, redemption is permitted strictly on interest payment dates, which are scheduled semi-annually.

Since the bonds were issued on June 16, 2020, investors became eligible from June 16, 2026. This framework ensures a minimum holding period while allowing partial liquidity at predefined intervals.

How Does RBI Calculate SGB Redemption Price?

The RBI calculates the redemption price based on the simple average of gold prices over the previous 3 business days. These prices correspond to gold of 999 purity and are sourced from the India Bullion and Jewellers Association.

This approach ensures consistency and reduces the impact of daily price volatility. The method aligns redemption payouts closely with prevailing bullion market rates.

What Are SGB Interest Earnings and Tax Implications?

SGBs offer a fixed interest rate of 2.5% annually on the initial investment amount. This interest is paid semi-annually and remains constant regardless of gold price movements.

Taxation differs based on the holding period, as only maturity after 8 years qualifies for capital gains tax exemption. Investors opting for premature redemption after 5 years may be subject to applicable capital gains tax.

Read More: Government Reduces Gold Base Import Price by $80.

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Conclusion

The SGB 2020-21 Series III tranche has delivered strong returns due to rising gold prices over the past 5 years. The redemption price of ₹14,774 translates into gains exceeding 219% from the issue level.

Alongside capital appreciation, investors also earned fixed interest during the holding period. The update highlights the performance of gold-linked instruments under changing market conditions.

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.