The Reserve Bank of India (RBI) has officially announced the final redemption price for the Sovereign Gold Bond (SGB) 2017-18 Series I. The bonds, issued in May 2017, are scheduled to mature on May 9, 2025, marking the completion of their 8-year tenor. As per RBI’s press release dated May 2, 2025, the final redemption price is ₹9,486 per gram.
The redemption price has been determined based on the simple average of the closing prices of gold of 999 purity, published by the India Bullion and Jewellers Association Ltd. For the final week of April leading into May 2025, prices from April 28, 29, and 30 were considered, since May 1 was a holiday and May 10–12 fall on weekends and market holidays.
When the SGB 2017-18 Series I was first offered in May 2017, the issue price stood at ₹2,951 per gram. Investors who subscribed online were granted a ₹50 discount per gram, effectively reducing their purchase cost to ₹2,901. The attractive pricing, combined with the appreciation in gold value over the years, has translated into a substantial capital gain for holders.
With the final redemption price fixed at ₹9,486 per gram, the absolute return over eight years stands at 221% (based on the ₹2,951 issue price). This does not include the semi-annual interest of 2.5% per annum that SGB investors earn during the holding period. Hence, the actual overall return for investors is even higher when the interest income is accounted for.
Consider an individual who invested in 50 grams of SGB units at the issue price of ₹2,951 per gram. The total investment would have been ₹1,47,550. Upon redemption in May 2025, the investor would receive ₹4,74,300 based on the final price of ₹9,486 per gram.
This translates into a gain of ₹3,26,750. Additionally, the entire maturity amount is exempt from tax, which significantly enhances the post-tax return.
Read More: Did You Know RBI Decided the SGB Redemption Price at ₹8,624 Per Unit?
A key benefit of Sovereign Gold Bonds lies in their tax treatment. While the periodic interest is taxable as per an individual’s income tax slab, the capital gains upon maturity are completely tax-free. This makes SGBs an efficient long-term holding for those seeking both capital appreciation and tax optimisation.
The final redemption of the Sovereign Gold Bond 2017-18 Series I underscores the potential of long-term gold-linked investments. While gold price trends remain influenced by global macroeconomic factors, the SGB structure offers a unique blend of market-linked returns, fixed interest income, and favourable tax treatment.
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.
Published on: May 5, 2025, 2:49 PM IST
Team Angel One
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