The Reserve Bank of India (RBI) has opened the final redemption of SGB 2017-18 Series-II on July 28, 2025. This final redemption is at a price of Rs 9,924, which is a whopping 251% upside from the SGB's issue price. Apart from this, investors also have the opportunity to earn 20% interest on their investment throughout the series' maturity period. But are gains in SGBs tax-free? Let's find out!
SGB 2017-18 Series-II Final Redemption:
According to the RBI, this Gold Bond shall be repayable on the expiration of eight years from the date of issue of the Gold Bonds. Accordingly, the final redemption date of the above tranche shall be July 28, 2025.
Further, the redemption price of SGB shall be based on the simple average of the closing price of gold of 999 purity of the week (Monday-Friday), preceding the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for the final redemption due on July 28, 2025, is fixed at Rs 9,924/- per unit of SGB based on the simple average of the closing gold price for the week July 21- 25, 2025.
The issue date of SGB 2017-18 Series-II was on July 28, 2017. That time, the issue price was Rs 2,830 per gram, excluding the online discount. Taking this into consideration and the current redemption price, there is a whopping 250.67% upside in the final redemption.
This also means that investors will make 250.67% gains on per unit of this SGB series. But did you know that the SGB is already offering cumulative 20% interest gains for the entire tenure, which excludes the surge in prices.
SGB 2017-18 Series-II Interest Rate:
This gold bond had an interest rate of 2.50% which was paid per annum basis on the nominal value. As per RBI, the interest was payable in half-yearly rests, and the last interest shall be payable along with the principal on maturity.
Are Gains In SGB Taxable?
According to the central bank's guidelines for these gold bonds, the interest on SGBs shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual is exempted. The „indexation benefits will be provided to long-term capital gains arising to any person on transfer of the bond.
What Are Sovereign Gold Bonds?
SGBs are government securities denominated in grams of gold. They are substitutes for holding 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 the Reserve Bank on behalf of the Government of India.
Why Prefer SGBs Over Physical Gold?
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form.
Also, the bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc, as per the central bank's FAQs.
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