The price of gold of 999 purity for the first week (Monday-Friday) from the date of redemption published by the Indian Bullion and Jewelers Association Limited (IBJA) is based on the simple average of closing, RBI said in a press release. September 9, 2022. “Accordingly, the redemption price for premature redemption due on September 17, 2022 will be ₹ 5077/- (Rupees five thousand seventy-seven only) per unit of SGB based on simple average of closing price of gold in the week September 05- 09, 2022,” it further added.
issue price sovereign gold bond Scheme 2016-17, Series IV gold was Rs 2,893 per gram. The nominal value of this sovereign gold bond was Rs 2,943 per gram. The central government, in consultation with the RBI, had offered a discount of Rs 50 per gram on the nominal value.
Therefore, if the investor opts for premature withdrawal, the full return will be 75.49 per cent {(Rs 5,077 redemption value – Rs 2,893 issue)/100}.
Sovereign Gold Bond Scheme: Premature Withdrawal Rule
The tenure of the Sovereign Gold Bond Scheme is eight years; However, premature withdrawals can be made after the fifth year from the date of issue of coupon payment dates.
In case of premature redemption, investors may approach the concerned bank or offices of Stock Holding Corporation of India Limited (SHCIL) or post office or agent thirty days before the coupon payment date. RBI mentions, “The request for premature redemption can be entertained only if the investor approaches the concerned bank/post office at least one day prior to the date of coupon payment.” The proceeds will be credited to the investor’s bank account provided at the time of applying for the bond.
Income Tax Rules for Premature Redemption of Sovereign Gold Bond Scheme
The interest rate on the bond has been fixed at 2.50 per cent per annum. The interest will be credited to the investor’s bank account semi-annually and the final interest will be paid on maturity along with the principal. The interest earned from the Sovereign Gold Bond is taxable as per the relevant tax bracket applicable to the investor. Note that there is no Tax Deducted at Source or TDS on Sovereign Gold Bond Scheme.
Capital gains earned at the time of maturity of the Sovereign Gold Bond are completely tax free. However, if investors want to exit before the maturity period of eight years, they will have to pay tax. For premature withdrawal, long-term capital gains will be taxed at the rate of 20 per cent along with indexation gains.