InvestorQ : Can I redeem the RBI sovereign gold bonds first issue at the recently opened window?
Dawn Cherian made post

Can I redeem the RBI sovereign gold bonds first issue at the recently opened window?

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Mitali Bhutta answered.
2 months ago
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RBI has set the redemption price of the first tranche of sovereign gold bonds of 2015 at Rs.4,837 per gram. The first tranche was issued in November 2015, at an issue price of Rs.2,684 per gram. This effectively translates into gains of 80% gains or an annualized CAGR of 12.5%. It must be remembered that this is the premature redemption window which opens once in six months after the fifth year. Final redemption will be after 8 years of issue.

However, there is an issue of capital gains one must be cautious about. SGBs are free of capital gains tax only on redemption, not on premature redemption. So this difference between the redemption price and the original price of purchase will be treated as long term capital gains, held for more than 36 months, and it will be taxed at the rate of 20% with the benefit of indexation. The other option is to wait till 2023, for SGB redemption.

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