Gold Bond 2020-21 Series XII Faces Early Redemption; Investors May Realize 248% Gain

Sovereign Gold Bond Scheme (SGB) 2020-21 Series XII

Premature Redemption

The Sovereign Gold Bond Scheme (SGB) 2020-21 Series XII will be available for premature redemption on March 9, 2026, as it enters its fifth-year redemption window under Government of India guidelines. Investors holding the bond are expected to realize a capital gain of approximately 248% over the original issue price of ₹4,612 per unit for online investors. The redemption price for the bond has been set at ₹16,063 per unit, calculated as the simple average of gold's closing prices on March 4, 5, and 6, 2026, based on data from the India Bullion and Jewellers Association Ltd (IBJA).

Capital Gains Tax Exemption

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The Union Budget 2026 proposes changes to SGB tax treatment, distinguishing between primary subscribers and secondary-market buyers. Effective April 1, 2026, the capital gains tax exemption on SGBs redeemed at maturity will apply only to investors who subscribe at the primary issuance by the RBI and hold the bonds until maturity. Investors who acquire SGBs from stock exchanges or other holders in the secondary market will not be eligible for tax-free redemption, even if they hold the bonds until maturity.

Sovereign Gold Bond Scheme (SGB) Details

SGBs are government securities denominated in grams of gold and serve as an alternative to holding physical gold. Investors pay the issue price in cash, and the bonds are redeemed in cash at maturity based on the prevailing gold prices. These bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. SGBs offer a fixed interest rate of 2.5% per annum on the amount of the initial investment, with interest credited semi-annually to the investor's bank account. The final interest payment is made along with the principal amount at maturity.