Sovereign Gold Bond (SGB) 2025: Upcoming Issues, Premature Redemption, Interest Rate, Features and Benefits

Latest Update: The Sovereign Gold Bond upcoming issues are uncertain since the government aims to discontinue this bond. The RBI has not announced the issuance of any SGB for FY 2024-25. 

Sovereign Gold Bonds (SGBs) are an ideal gold investment with assured returns. It is offered by the Reserve Bank of India (RBI) and they are an alternative investment mode for physical gold.  

Learn more about the: 

• SGB features 
• Upcoming SGB issues 
• Eligibility to invest in SGB 
• SGB interest rates 
• SGB premature redemption rules

What is a Sovereign Gold Bond?

The Government of India introduced the Sovereign Gold Bond (SGB) in November 2015 under the Gold Monetisation Scheme to offer an alternative investment to physical gold. Sovereign Gold Bonds (SGB) are government securities whose value is denominated in grams of gold.

SGBs are issued by the RBI. Investors have to pay the SGB issue price in cash and they will get cash when they redeem these up on maturity. Since they are government securities and are issued by the RBI, they are considered safe. 

Through SGBs, you can own gold in a digital form without its inherent risks or bearing making and wastage charges. They are low-risk investments that provide returns.  SGBs have witnessed a significant increase in investors, with it being considered a substitute for physical gold. 

Sovereign Gold Bond Next Issue and Upcoming Issues

The Finance Minister stated that the government is considering to close the Sovereign Gold Bond (SGB) Scheme in 2025 during a media interaction after the Budget 2024-25 session. 

Thus, there are no issues of SGBs now. The details of the last issue of SGBs are as follows:

Sovereign Gold Bond 2023-24 Series IV

Features of Sovereign Gold Bonds

Eligibility of Sovereign Gold Bonds

The follwoing are eligible to subscribe for SGB:

• Indian resident individuals
• Individuals on behalf of a minor
• Trusts
• HUFs
• Charitable institutions
• Universities 

How Does Sovereign Gold Bonds Work?

A person can apply for a Sovereign Gold Bond through their banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices and recognised stock exchanges, such as the Bombay Stock Exchange and National Stock Exchange of India Limited, either directly or through agents.

SGBs can also be bought online through the commercial banks’ websites authorised to sell them. Here's how SGBs works:

• Purchase gold bonds from a bank, SHCIL or designated post offices.
• If you have purchased a SGB online, it will reflect in the Demat account portfolio. In case of offline purchase, you can collect the SGB certificate from the holding from the issuing bank, post offices, SHCIL offices or designated agents.
• You will get a 2.5% interest per annum.
• You can redeem your SGB after 8 years or prematurely redeem them after 5 years.

Sovereign Gold Bond Redemption

When the issued SGB completes 8 years, it comes up for final redemption. The price for final redemption is determined based on the simple average closing price of gold with 999 purity in the previous three working days, as reported by the India Bullion and Jewellers Association Ltd (IBJA).

The RBI has fixed the final redemption price of Rs.9,486 per unit of SGB for the SGB 2017-18 Series I, which is due for final redemption on 9 May 2025. This price fixed is based on the simple average of closing gold price for the week of 28 April-02 May 2025.

Sovereign Gold Bond Premature Redemption Price

The price for redemption is determined based on the simple average closing price of gold with 999 purity in the previous three working days, as reported by the India Bullion and Jewellers Association Ltd (IBJA). 

Investors can initiate early redemption of their SGBs after the fifth year from the date of SGB issuance, coinciding with the interest payment date. SGB 2020-21 Series I is up for premature redemption on 28 April 2025 at a price of Rs. 9,600 per unit per SGB.

Sovereign Gold Bond Benefits

• Sovereign Gold Bonds provide guaranteed returns since it is a government-backed scheme. 
• You can earn a guaranteed annual interest at the rate of 2.50% (on the issue price).
• Long-term capital gains arise when investors transfer bonds qualify for indexation benefits. There is also a sovereign guarantee on the principal and the interest earned.
• You can trade gold sovereign bonds on stock exchanges within a specific date (at the issuer's discretion). For instance, after completing five years of investment, you can trade them on the National Stock Exchange or Bombay Stock Exchange, among others.
• Some banks accept SGB as collateral/security against loans pledged in Demat form. Hence, they will treat it as a gold loan after setting the loan-to-value (LTV) ratio to the value of gold. The India Bullion and Jewellers Association Limited determines this.

Sovereign Gold Bond Price History

The price history of SGB for FY 2023-24 is as follows:

Sovereign Gold Bond Tax Exemption Under Section 80C

There are no tax deduction benefits for the lump sum deposit of SGBs under Section 80C of the Income Tax Act. The interest given on SGB deposits is also not tax-free. The interest amount must be declared under ‘Income from Other Sources’ during tax returns. The income tax will be as per the individual’s income tax slab. Tax Deducted at Source (TDS) is not applicable on SGBs. However, they are exempt from capital gains tax when held till maturity.

Gold Sovereign Bonds are new-age investment vehicles for those interested in diversifying their portfolio with gold holdings.

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