The Reserve Bank of India (RBI) has announced the dates for the premature redemption of Sovereign Gold Bonds, 2017-18, Series XI. This particular tranche of sovereign gold bonds (SGBs) was issued on December 11, 2017.
SGBs can be redeemed prematurely after the fifth year from the date of issue, coinciding with the interest payment date. Accordingly, the next due date for premature redemption of this tranche has been kept for June 9, 2023, as June 10 and 11, 2023 happen to be non-working days, Saturday and Sunday, respectively.
The redemption price of the SGBs will be based on the simple average of the closing gold price of 999 purity for the previous three business days. The India Bullion and Jewellers Association Ltd (IBJA) publishes these prices, according to an RBI release.
For the premature redemption due on June 9, 2023, the redemption price has been set at Rs. 5,990 per unit of SGB. This price is based on the simple average of the closing gold price from June 6-8, 2023. One unit of SGB represents one gram of gold.
Bond Maturity And Interest
SGBs have a fixed maturity period of eight years from the date of issue. The interest on these bonds is fixed 2.50 per cent per annum, payable semi-annually to the investor’s bank account. The last interest payment will be made at maturity, along with the principal.
Sovereign Gold Bonds
Unlike physical gold investments, SGBs are free from losses arising due to making charges, storage costs, and purity issues. Additionally, no tax is imposed if the SGBs are held till maturity. However, if the bonds are sold before 36 months, they may be subject to short-term capital gains tax with the tax being levied according to the investor’s income tax bracket.
While investing in SGBs can be a relatively safe option during inflation or uncertain economic times, it is important to note that gold prices are influenced by market forces and can fluctuate. Liquidity is relatively low for redemption, although the bonds can be sold in the share market. These bonds are a good alternative investment avenue for those seeking exposure to gold without physical ownership.