The Reserve Bank of India (RBI) has announced the final redemption of Sovereign Gold Bonds (SGBs) under the 2017-18 Series III, which were issued on December 15, 2017. The redemption is effective from October 16, 2025, at a price of ₹12,567 per unit, offering investors a 338.48% gain over the issue price of ₹2,866, excluding the 2.5% annual interest earned during the holding period.
According to the RBI statement, the redemption price is based on the simple average of closing gold prices published by the India Bullion and Jewellers Association (IBJA) for October 13, 14, and 15, 2025. While SGBs are repayable at the end of eight years from the issue date, premature redemption is allowed after the fifth year, payable on the next interest payment date.
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Interest and Taxation
SGBs carry a fixed annual interest rate of 2.5%, credited semi-annually to investors’ bank accounts. While the interest is taxable as per the Income Tax Act, 1961, the capital gains on redemption are exempt from tax. Long-term capital gains arising from the transfer of these bonds are eligible for indexation benefits.
About the SGB Scheme
Launched in November 2015 by the Government of India, the Sovereign Gold Bond Scheme provides an alternative to owning physical gold. Issued by the RBI on behalf of the Centre, the bonds are denominated in grams of gold and offer both fixed interest and capital appreciation linked to gold prices. The scheme aimed to reduce reliance on imported gold, curb hoarding, and channel household savings into financial assets.
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Discontinuation of Fresh Issuances
The government discontinued fresh SGB issuances in October 2023, citing that the scheme had largely achieved its objectives and that managing the bonds had become costlier. Alternatives such as Gold ETFs and digital gold have also reduced the need for regular SGB issuances. Existing bonds, however, remain valid until maturity or can be redeemed prematurely as per the scheme rules.
