Sovereign Gold Bonds: Final redemption date, price of SGB Scheme 2016-II announced. Check details

The Reserve Bank of India has announced the final redemption date and price for the Sovereign Gold Bond (SGB) Scheme SGB 2016-II. The central bank issued a notification on March 22, 2024, in which it stated that the final redemption date has been set for March 28, 2024 (Thursday). The SGB 2016 Series II tranche was issued on March 29, 2016.

The central bank has announced that the final redemption price has been set at Rs 6,601 per unit, reflecting the simple average closing price of gold for the week of March 18-March 22, 2024, as per the SGB scheme guidelines.

The Sovereign Gold Bonds 2016-II was offered at an initial issue price of Rs 2,916 per gram. This means will yield around 126% gain for investors upon maturity.

SGBs, which were first floated in November 2015, are government securities denominated in grams of gold. They were introduced as substitutes of physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. 

The interest on SGB is credited semi-annually to the investor's bank account, with the final interest payment due along with the principal at maturity.

Upon subscription, investors are given a Certificate of Holding for recod. These bonds can be converted into demat form.

Bond maturity

Investors are provided with a one-month notice before the bond's maturity. On the maturity date, the proceeds (invested money + interest) are credited to the registered bank account.

Investors must update any changes in account details with the bank, Stock Holding Corporation of India (SHCIL) or post office.

In most cases, SGBs will be automatically redeemed by the issuer, which, in this case, is the Government of India through the Reserve Bank of India.

If an investor's account undergoes any updates during this period and they fail to provide the necessary information, it may result in the non-crediting of SGBs.

Opting not to redeem the bonds technically means investors retain ownership of them.

However, the SGBs will no longer accrue interest, and their value will be susceptible to market fluctuations.

Sovereign Gold Bond Price History 2023-24

Series	Month	Price per Gram
Series 1	June 2023	Rs. 5,926
Series 2	September 2023	Rs. 5,923
Series 3	December 2023	Rs. 6,199
Series 4	February 2024	Rs. 6,263

Taxes on SGBs

The interest on SGBs will be taxed in accordance with the terms of the Income-tax Act, 1961 (43 of 1961). Holding SGBs until maturity in the eighth year offers a 100% capital gains exemption for investors. 

The capital gains tax imposed on the redemption of SGB has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.