Premature Redemption Price SGB

Premature redemption price of sovereign gold bond fixed at Rs.5054/unit for Series II of SGB 2017-18

The price for premature redemption of sovereign gold bond  due on July 28, 2022 (Series II of SGB 2017-18) has been fixed at Rs 5,054 per unit

Premature redemption price of sovereign gold bond fixed at Rs.5054/unit for Series II of SGB 2017-18

Premature redemption of Gold Bond is permitted after the fifth year from the date of issue and the due date of SGB 2017-18, Series II issued on July 28, 2017 is July 28, 2022.The redemption price of SGB is based on the average 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.

Accordingly, the redemption price for the first premature redemption due on July 28, 2022 shall be Rs.5054/- per unit of SGB based on the simple average of closing gold price for the week July 18-22, 2022.

The RBI issues the bonds on behalf of the Government of India which are sold through banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and NSE and BSE. The scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings  used for the purchase of the yellow metal into financial savings.The bonds are denominated in multiples of gram (s) of gold with a basic unit of 1 gram. The tenor of the bond is 8 years with an exit option after the 5th year to be exercised on the next interest payment dates.The minimum permissible investment is 1 gram of gold. The maximum limit of subscription is 4 kg for individuals and HUFs and 20 kg for trusts and similar entities per financial year. The know-your-customer norms are the same as that for the purchase of physical gold.

The interest earned from SGB will be taxable as income from other sources while TDS is not applicable on the bond. The rules on the taxation of capital gains on redemption of SGB are very clear that after the maturity of 8 years lock-in period the entire gains are exempted or tax free.However, if the SGB is redeemed after the lock-in period of 5 years and before the maturity period of 8 years, the gains accumulated on the redemption will be long term capital gains and it will be taxed at 20 per cent with indexation benefit If the indexation benefit is not opted then 10 per cent tax rate.

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