RBI Announces 257% Profit on Sovereign Gold Bonds

The Reserve Bank of India (RBI) has announced that investors in the Sovereign Gold Bond (SGB) scheme SGB 2019-20 Series-VIII will receive a redemption price of Rs 14,170 per unit if they choose to redeem their bonds prematurely on July 21, 2026.

This bond series, which was issued between January 13-17, 2020, has an eight-year duration but allows investors to redeem it after the fifth year.

Investors are expected to gain a 257% return over six years and six months, which equates to an annualized return of over 21%.

Additionally, there is an extra return of 2.5% paid half-yearly to investors.

The redemption price is based on the simple average of the closing price of gold for the three business days before the redemption date.

The current gold price in India is Rs 14,247 per gram as of July 20.

A significant change in the taxation of SGBs was introduced in Budget 2026, stating that capital gains from gold bonds will be exempt from tax if the bond was purchased during primary issuance and held for the full 8 years until maturity.

Premature withdrawal through the RBI does not qualify for this exemption.

Capital gains from SGBs will be taxable if they are bought in the secondary market, sold in the secondary market, or redeemed during a premature withdrawal window, regardless of the original purchase method.