SGB 2019-20 Series II Redemption at ₹14,199: Tax Change

The Reserve Bank of India set the premature redemption price for Sovereign Gold Bond 2019-20 Series II at ₹14,199 per gram, effective July 16, 2026. The price uses the simple average of 999 purity gold closing prices from the India Bullion and Jewellers Association for July 13, 14, and 15.\n\nInvestors who subscribed online in July 2019 paid ₹3,393 per gram after a digital discount. Offline subscribers paid ₹3,443. The gap between the issue price and the redemption price means an absolute gain of ₹10,806 per gram for online buyers, or about 318.5%. For offline buyers, the gain is ₹10,756 per gram, roughly 312.4%. These returns exclude the 2.5% annual interest paid semi-annually. A ₹1 lakh online investment at issue would now fetch about ₹4.18 lakh at redemption, before interest.\n\nThe more important shift is the tax rule. From April 1, 2026, capital gains tax exemption applies only to original subscribers who hold the bonds until the full eight-year maturity. Investors who redeem early, after the five-year lock-in, must pay capital gains tax. The same rule applies to investors who bought SGBs on the secondary market; they lose the exemption even if they hold until maturity. That changes the net return calculation for anyone considering an early exit.\n\nThe RBI determines the redemption price using the simple average of IBJA's 999 purity gold closing prices for the three business days before the redemption date. The bonds pay 2.5% per annum on the initial investment, regardless of gold price movements.