From Rs 2,943 to Rs 8,624: SGB investors pocket tax-free windfall. Here’s how that works

Investors in the Sovereign Gold Bond (SGB) 2016-17 Series IV are set for a tax-free windfall, as the Reserve Bank of India (RBI) has announced the final redemption price — nearly tripling their investment.

Issued in February 2017 at Rs 2,943 per gram, these bonds will now be redeemed at Rs 8,624 per gram, giving investors a 193% return. Redemption is scheduled for March 17, 2025, based on the average closing price of 999 purity gold between March 10 and March 13, 2025, as published by the India Bullion and Jewellers Association (IBJA).

Additionally, RBI has confirmed premature redemption for SGB 2019-20 Series IV, originally issued on September 17, 2019, also maturing on March 17, 2025. Investors redeeming early will receive Rs 8,634 per gram, based on gold prices from March 11 to March 13, 2025.

Experts point out that holding Sovereign Gold Bonds until maturity offers several key advantages:

• Tax-Free Capital Gains: If held till maturity, SGBs are fully exempt from capital gains tax — a major edge over most other investments.
• Guaranteed Returns: SGBs offer 2.5% annual interest, paid semi-annually, providing a steady income stream.
• Market-Linked Returns: Redemption is tied to prevailing gold prices, allowing investors to benefit from any rise in gold value.
• Safety and Security: Backed by the Government of India, SGBs carry sovereign guarantee, eliminating default risk.
• Convenience: Available in paper or electronic form, they avoid storage and security concerns tied to physical gold.
• No Storage Costs: Since they’re digital, there are no storage or insurance costs, lowering total investment expenses.
• Liquidity Options: Though they mature in eight years, SGBs can be traded on stock exchanges or redeemed early after five years, giving investors flexibility.

Gold prices continue to surge, hitting a record Rs 88,310 per 10 grams and crossing $3,000 per troy ounce globally. On MCX, gold has risen over 14% this year, adding Rs 11,000 — reaffirming gold's role as a safe, high-return asset.