The bond’s tenure is eight years while premature redemption of a gold bond under the sovereign gold bond scheme will be allowed after five years from the date of issue of the bond and on the day that interest is due. Thus, April 15, 2023, will be the second due date for early redemption of the aforementioned tranche (April 16, 2023, being a Sunday).
Also read: Sovereign Gold Bonds: RBI issues dates for premature redemption, check details
SGB premature redemption rate
The premature redemption rate of Sovereign Gold Bond Series III of SGB 2017-18 is Rs 6063 per unit.
The issue price of Sovereign Gold Bond 2017-18 Scheme Series III was Rs 2,964 per gram. The RBI has fixed the redemption price at Rs 6063 per gram. So, if the investors opt for premature withdrawal, then the absolute return will be 104.55 per cent.
How is the premature redemption rate calculated?
The simple average of the closing gold price for the previous three business days, as reported by the India Bullion and Jewellers Association Ltd. (IBJA), will serve as the basis for the redemption price of SGB, as per the RBI press release. Accordingly, based on the simple average of the closing gold price for the three most recent days, April 11, April 12, and April 13, 2023, the redemption price for the premature redemption due on April 15, 2023 (April 16, 2023, being a Sunday) shall be 6063/- (Rupees Six Thousand Sixty-three only) per unit of SGB.
Premature withdrawal rule
In the event of a premature redemption, investors should contact the relevant bank SHCIL office, Post Office, agent thirty days before the coupon payment date. Premature redemption requests will only be considered if the investor approaches the relevant bank, post office at least one day before the coupon payment date. The proceeds will be deposited into the customer’s bank account, which was specified when applying for the bond.
The interest on the SGB will be taxable under the provisions of the Income-tax Act of 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. Long-term capital gains deriving from the transfer of bonds will be eligible for indexation benefits.
The interest on the SGB will be taxable under the provisions of the Income-tax Act of 1961 (43 of 1961). The interest earned from the Sovereign Gold Bonds is taxable according to the relevant tax bracket applicable to the investor. Do note that there is no Tax Deducted at Source or TDS on the Sovereign Gold Bond Scheme.