Buying Sovereign Gold Bond (SGB) has emerged as a popular gold investment option for many Indian savers. The gold bond prices at the time of purchase and redemption are market-linked but as they are issued by the government, it has become the first choice of many gold investors. SGBs are not available ‘on-tap’ but are issued by the government in tranches all through the year.
On purchasing SGBs during the tranche offer, the holding period is eight years after which the bonds can be sold back to the government. However, premature redemption of the bonds is permitted after five years from the date of issue of such bonds. SGB holders also have the option to sell bonds in the secondary market available on the NSE, BSE stock exchanges.
The government has recently come out with the Sovereign Gold Bond (SGB) Scheme Calendar for premature redemption during April – September 2022. If you are holding any of the SGB from previous tranches and want to redeem them to get money, you can redeem them now.
Here are the dates:
After the end of five years, the redemption window gets opened on the date on which the next interest is payable. Window for early redemption will be open for about 20 days. The request for premature redemption is to be submitted to the Depository at least 10 days before the next interest payment date. The redemption proceeds shall be credited to the bank account of the customer.
In case of premature redemption, the Bonds are redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous week (Monday to Friday) for SGBs and previous three working days for tranches issued thereafter at the rate published by the India Bullion and Jewellers Association Limited.
Investments in Sovereign gold bonds (SGB) as compared to buying physical gold have certain well-defined benefits. While physical gold bought from jewellers or banks could come at a premium, of somewhere around 10 percent, the price of SGB is close to the actual gold price. Further, SGB’s taxation is in favour of investors as the gains are exempted on maturity unlike physical gold where gains are subject to tax.